h 


CONTEMPORARY 


THEORIES   OF  UNEMPLOYMENT 

AND  OF 

UNEMPLOYMENT   RELIEF 


BY 


FUEDERICK  C.  MILLS,  M.  A. 

Sometime  Garth  Fellow  in  Economics 
Columbia  University 


SUBMITTED   IN   PARTIAL   FULFILMENT   OF   THE   REQUIREMENTS 

FOR    THE   DEGREE   OF   DOCTOR    OF    PHILOSOPHY 

IN  THE 

Faculty  of  Political  Science 
Columbia  University 


NEW  YORK 
I917 


EXCHANGE 


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CONTEMPORARY 
THEORIES   OF  UNEMPLOYMENT 

AND  OF 

UNEMPLOYMENT   RELIEF 


BY 

FREDERICK  C.  MILLS,  M.  A. 

Sometime  Garth  Fellow  in  Economics 
Columbia  University 


SUBMITTED   IN   PARTIAL   FULFILMENT   OF   THE   REQUIREMENTS 

FOR   THE   DEGREE   OF   DOCTOR   OF   PHILOSOPHY 

IN  THE 

Faculty  of  Political  Science 
Columbia  University 


NEW  YORK 
I917 


..^-^^ 


Copyright,  191 7 

BY 

FREDERICK  C.  MILLS 


lO^ 


TO  MY  MOTHER 
LILY  NIGHTINGALE  MILLS 


PREFACE 

Certain  explanations  of  the  choice  and  arrangement 
of  material  in  this  monograph  are  necessary. 

The  subject  of  unemployment  is  one  which  ramifies 
into  many  channels.  An  exhaustive  survey  of  the  field 
being  impossible,  the  necessity  of  severely  limiting  the 
study  to  certain  lines  of  investigation  involved  the  neg- 
lect of  other  equally  important  phases  of  the  question. 
So  far  as  has  been  possible  the  work  has  been  held 
strictly  to  a  study  of  theories  as  to  the  causes  of  the 
modern  phenomena  of  unemployment  and  as  to  the 
methods  by  which  unemployment  can  be  prevented  or 
relieved.  Facts  concerning  the  extent  of  unemployment 
have  been  touched  upon  only  where  they  have  a  bearing 
upon  either  of  these  two  subjects. 

Though  the  paper  has  been  prepared  primarily  to 
present  present-day  theories,  its  scope  has  been  slightly 
enlarged  so  as  to  include,  on  the  side  of  theory,  a  brief 
statement  of  the  treatment  of  the  subject  of  unemploy- 
ment by  the  classical  economists,  and,  on  the  side  of 
practical  relief,  as  representing  the  working-out  of  cer- 
tain theories,  a  summary  of  the  treatment  of  the  able- 
bodied  poor  under  the  English  Poor  Law.  A  brief 
compendium  of  the  course  of  tramp  and  vagrancy  legis- 
lation in  the  various  states  of  the  United  States  is  also 
included.  It  was  felt  that  without  some  such  foundation 
the  study  of  contemporary  theories  would  have  been  too 
far  divorced  from  practical  relief  and  from  previous  eco- 
nomic thought. 

7]  7 


»ap»^*-^ 


8  PREFACE  [8 

With  the  exception  of  some  early  study  by  Henry  C. 
Carey,  Francis  A.  Walker,  Henry  George  and  a  few  re- 
lief administrators,  the  subject  of  unemployment  is  one 
that  has  only  recently  attracted  attention  in  the  United 
States.  The  course  of  recent  opinion  in  this  country  on 
this  subject  has  been  largely  influenced  by  continental 
and,  especially,  by  English  thought.  It  is  in  the  latter 
country  that  scientific  method  has  been  most  effectively 
applied  to  the  study  of  this  problem.  This  exposition 
begins,  accordingly,  with  a  treatment  of  the  development 
of  English  practice  and  of  present  English  theories  on 
the  subject. 

The  method  adopted  for  the  arrangement  and  presen- 
tation of  the  material  involve  the  breaking-up  of  the 
complete  theories  advanced  by  the  various  writers  in 
order  to  present  their  various  views  on  each  of  the  main 
theories  that  are  held  today.  This  arrangement  sacri- 
fices the  possibility  of  comparing  the  views  of  one  au- 
thority, as  a  unified  whole,  with  those  of  another ;  but  it 
makes  possible  the  full  presentation  of  each  of  the  main 
types  of  theory  without  the  repetition  and  disorganiza- 
tion that  would  result  from  the  full  statement,  in  chrono- 
logical order,  of  the  complete  program  of  each  thinker 
considered. 

The  definitions  given  to  the  term  **  unemployment  "  by 
the  various  authorities  cited  vary  widely,  some  using  it 
to  cover  merely  the  involuntary  idleness  of  able-bodied 
workers,  others  cloaking  under  it  all  idleness,  whatso- 
ever its  cause  or  nature.  The  limiting  extent  to  which 
certain  authorities  apply  the  term  is  indicated  in  the  con- 
sideration of  their  theories.  Throughout  this  paper,  how- 
ever, unless  otherwise  noted,  the  term  is  used  in  a  broad 
sense ;  in  the  writer's  opinion  the  vagrant  and  other 
types  of  ''  unemployables  "  are  legitimate  elements  of  the 


9]  PREFACE  9 

problem  of  unemployment,  even  though  the  social  or 
industrial  cause  be  one  step  further  removed  than  in  the 
case  of  the  temporarily  unemployed  wage  earner. 

The  inclusion  in  the  present  paper  of  a  study  of  French 
and  German  theories  has  not  been  possible.  Important 
contributions  to  the  subject  have  been  made  by  conti- 
nental students  and  by  continental  practice.  It  is  hoped 
that  it  will  be  possible  to  make  such  a  survey  at  some 
time  in  the  future. 

The  writer  desires  gratefully  to  acknowledge  his  in- 
debtedness to  those  who  have  aided  him  in  the  prepara- 
tion of  this  monograph.  Professors  Carl  C.  Plehn  and 
Jessica  B.  Peixotto  of  the  University  of  California  have 
given  helpful  advice  and  criticism.  Sincere  thanks  are 
due  Professor  Henry  R.  Seager  of  Columbia  University 
for  valuable  assistance  in  the  revision  of  the  manuscript 
and  in  the  preparation  of  proof.  To  Professor  Carleton 
H.  Parker  of  the  University  of  Washington  the  writer 
stands  deeply  obligated  for  the  enthusiasm  which  he  has 
contributed  to  the  performance  of  this  work. 


CONTENTS 


CHAPTER  I 

FAGK 

The  Development  of  English  Unemployment  Theory  and 
Remedial  Practice 

1.  The  Classical  Economists  on  Unemployment 13 

2.  The  Able  Bodied  Under  the  English  Poor  Law 22 

3.  The  Unemployed  Workman  Act 31 

4.  Board  of  Trade  Labor  Exchanges 36 

5.  The  National  Insurance  Act 38 

CHAPTER  n 

Contemporary  English  Theories  of  Unemployment  and  of 
Unemployment  Relief 

1.  Loss  and  Lack  of  Industrial  Quality 42 

2.  Proposed  Remedies  for  Qualitative  Maladjustments 52 

3.  Industrial  Fluctuations 59 

4.  Proposed  Remedies  for  Unemployment  Resulting  from  Indus- 

trial Fluctuations •  .  .  .  67 

5.  The  Labor  Reserve 84 

6.  Proposed  Remedies  for  Under-employment 90 

7.  The  Personal  Equation  in  the  Problem  of  Unemployment.    .  .  100 

8.  Proposed  Remedies  for  Unemployment  due  to  Personal  Failings  104 

9.  Unemployment  Insurance     107 

10.  The  Relief  of  the  Unemployed 113 

CHAPTER  III 

The  Development  of  American  Unemployment  Theory  and 
Remedial  Practice 

1.  Miscellaneous  Types  of  Early  Theory 118 

2.  The  Early  American  Economists  on  Unemployment 124 

3.  Methods  of  Practical  Relief 127 

4.  Tramp  and  Vagrancy  Legislation  in  the  United  States 130 

II]  II 


12  CONTENTS  [l2 

CHAPTER  IV 

Contemporary  American  Theories  of  Unemployment  and  of 
Unemployment  Relief 

PASK 

1.  General  Statement 138 

2.  The  Relation  of  Immigration  to  Unemployment 146 

3.  The  Floating  Laborer 157 

CHAPTER  V 
i     Conclusion 163 

Appendix  I.     American  Statistics  on  Unemployment 165 

Appendix  II.   References 170 


CHAPTER  I 

The  Development  of  English  Unemployment 
Theory  and  Remedial  Practice 

I.  the  classical  economists  on  unemployment 

The  period  during  which  the  classical  system  of  eco- 
nomics of  the  Manchester  School  was  being  formulated 
was  one  characterized  by  distress  from  unemployment  at 
least  equally  severe  with  any  of  more  recent  years.'  Yet 
we  find  no  exposition  of  unemployment  as  such.  Cer- 
tain problems  closely  connected  with  that  subject  are 
discussed,  but  chief  emphasis  is  usually  placed  upon  an 
aspect  other  than  that  bearing  upon  the  question  under 
consideration.  Thus  the  possibility  of  general  over- 
production and  "  glut"  is  a  favorite  bone  of  controversy, 
but  the  point  with  which  the  economists  are  primarily 
concerned  is  whether  profits  could  thus  be  reduced  to 
zero,  not  whether  the  resulting  flooding  of  the  market 
would  throw  men  out  of  work.     However,  there  is  a  re- 

^  Sir  Robert  Giffen,  in  his  inaugural  address  as  President  of  the  Royal 
Statistical  Society  in  1883,  stated  "...  the  poor  are  to  some  .   .   . 
extent,  fewer,  and  those  who  remain   poor    are,  individually,  twice 
as  well  off  on  the  average  as  they  were  fifty  years  ago."     Quoted, 
Webb  and  Freeman,  Seasonal  Trades  (London,  1912),  p.  7. 

In  Essays  in  Finance  (second  series),  p.  379,  Mr.  Giffen  writes: 
*'  .  .  .  periodic  starvation  was  in  fact  the  condition  of  the  masses  of 
the  working  men  throughout  the  Kingdom  fifty  years  ago."  Quoted, 
Seasonal  Trades,  p.  7. 

Cf.  also  "Distress  of  Laboring  Classes  since  1815."    T.  R.  Mal- 
thus,  Principles  of  Political  Economy  (Boston,  1821),  p.  379,  et  seq. 
13]  13 


14    CONTEMPORARY  THEORIES  OF  UNEMPLOYMENT    [14 

lation  more  or  less  intimate  between  many  of  the  modern 
theories  and  those  set  forth  by  the  men  of  this  school. 
A  summarized  statement  of  their  views  will  pave  the 
way  for  the  presentation  of  later  developments  in  this 
field. 

On  the  question  of  the  irregularity  of  employment 
Adam  Smith  says  the  first  and,  so  far  as  his  followers  in 
this  school  are  concerned,  the  last  word.  As  one  of  the 
five  classic  reasons  for  the  inequalties  of  wages  between 
different  industries  Smith  includes  relative  constancy  or 
inconstancy  of  employment.^  The  more  inconstant  the 
employment  the  higher  will  be  the  wage,  for  "  What  he 
earns  .  .  .  while  he  is  employed,  must  not  only  maintain 
him  while  he  is  idle,  but  make  him  some  compensation 
for  those  anxious  and  desponding  moments  which  the 
thought  of  so  precarious  a  situation  must  sometimes 
occasion."  This  principle  is  repeated  by  Smith's  succes- 
sors for  over  one  hundred  years,  practically  unquestioned 
except  by  Senior,  who  disagrees  as  to  the  increased  an- 
nual real  wage.  "But  this  evil  (despondency  because 
of  precarious  situation)  is  compensated,  and  in  most  dis- 
positions more  than  compensated,  by  the  diminution  of 
his  toil.  We  believe,  after  all,  that  nothing  is  so  much 
disliked  as  steady,  regular  labor;  and  that  the  oppor- 
tunities of  idleness  afforded  by  an  occupation  of  irregular 
employment  are  so  much  more  than  an  equivalent  for  its 
anxiety  to  reduce  the  wages  of  such  occupations  below 
the  common  average." "  Senior  contends,  however,  that 
the  periods  during  which  capital  is  unproductive  must 
be  compensated  by  a  surplus  profit  when  it  is  produc- 
tively used. 

^  Wealth  of  Nations,  book  i.  chap.  x. 

'Nassau  W.  Senior,  Political  Economy  (6th  ed.,  London,  1872),  pp. 
207-8.     Also  quoted  in  Seasonal  Trades,  p.  10. 


15]     DEVELOPMENT  OF  ENGLISH  UNEMPLOYMENT       15 

Thomas  R.  Malthus,  following  Adam  Smith,  made 
two  important  contributions  to  the  subject  under  con- 
sideration.  His  doctrine  of  population,  at  least  as  it 
was  first  enunciated,  and  as  interpreted  by  later  fol- 
lowers, exercised  a  vicious  negative  effect  on  the  course 
of  scientific  study  of  the  problems  connected  with  desti- 
tution. The  effect  it  had  of  completely  overshadowing 
certain  other  doctrines  advanced  by  Malthus  in  connec- 
tion with  this  same  subject  has  been  almost  equally  re- 
grettable. His  theory  of  the  pressure  of  population  on 
the  means  of  subsistence,  the  resulting  destitution  being 
merely  one  of  the  natural  positive  checks  to  an  excess 
of  numbers,  is  too  well  known  to  require  detailing  here.^ 
Unemployment,  according  to  this  view,  is  caused  solely 
by  an  excess  of  workers,  and  can  only  be  dealt  with  by 
allowing  full  play  to  the  rigorous  process  of  natural 
selection.  "  A  man  who  is  born  into  the  world  already 
possessed,  if  he  cannot  get  subsistence  from  his  parents 
on  whom  he  has  just  demand,  and  if  society  do  not  want 
his  labours,  has  no  claim  of  rt^ht  to  the  smallest  portion 
of  food,  and,  in  fact,  has  no  business  to  be  where  he  is. 
At  Nature's  mighty  feast  there  is  no  vacant  cover  for 
him.  She  tells  him  to  be  gone,  and  will  quickly  execute 
her  own  orders  if  he  does  not  work  upon  the  compas- 
sion of  some  of  her  guests."  ^  His  theory  is  essentially 
one  of  surplus  population.  Malthus's  doctrines  were 
eagerly  accepted  by  the  upper  classes,  for  they  lifted 
from  their  shoulders  not  only  responsibility  for  the  con- 
dition of  the  poor,  but  also  responsibility  for  active 
effort  toward  social  improvement. 

Malthus'  relation  to  unemployment  theories  does  not 

*  For  the  theory  in  full  see  Malthus,  An  Essay  on  the  Principles  of 
Population  (London,  1803). 
^Ibid.,  p.  53.     Quoted,  Seasonal  Trades,  p.  11. 


l6    CONTEMPORARY  THEORIES  OF  UNEMPLOYMENT    [i6 

end  here,  however.  In  his  Principles  of  Political  Econo- 
my,^ is  included  the  earliest,  most  complete  and  most  sym- 
pathetic treatment  of  the  question  of  the  unemployed  that 
is  found  anywhere  in  the  works  of  the  economists  of  this 
school.  In  attempting  to  explain  the  distress  of  the  labor- 
ing classes  after  1815,  he  contends  it  to  be  due  to  the  fact 
that  capital,  revenue,  and  the  effective  demand  for  pro- 
duce had  been  diminished  by  the  wars,  while  the  work- 
ing population  was  in  excess  of  the  demand,  because  of 
the  many  births  during  the  preceding  period,  and  the 
return  of  soldiers  and  sailors  from  the  wars.  He  recom- 
mends as  a  remedy  the  employing  of  the  working  classes 
in  unproductive  labor,  or  at  least  in  labor  the  results  of 
which  would  not  go  for  sale  into  the  markets.  The  build- 
ing of  public  works  and  the  improvement  of  grounds  and 
hiring  of  servants  by  the  wealthy  are  advocated.  Stat- 
ing that  "  nothing  can  compensate  the  laboring  class  for 
a  fall  in  the  demand  for  labor,"  that  "fluctuations  al- 
ways bring  more  evil  than  good  to  the  working  classes," 
he  urges  that  it  should  be  the  object  of  government  to 
maintain  peace  and  an  equable  expenditure.^  The  pas- 
sage is  noteworthy  not  only  for  the  striking  change  in 
spirit  since  the  earlier  work,  but  for  the  recognition  of 
the  evil  effects  on  the  laboring  class  of  industrial  fluctu- 
ations, and  for  the  recommendation  of  methods  for  re- 
lieving the  distress  due  to  unemployment. 
:  Malthus'  treatment  of  overproduction  is  worthy  of 
iiote  because  of  the  importance  of  that  subject  in  later 
discussion.  He  argues  the  possibility  of  a  real  excess 
of  goods  over  the  quantity  that  could  be  consumed, 
though  he  does  not  show  the  possible  connection  be- 
tween overproduction  and  unemployment. 

^  T.  R.  Malthus,  Principles  of  Political  Economy  (Boston,  1821), 
p.  371  et  seq. 
^ Ibid.,  p.  403. 


1 7]     DEVELOPMENT  OF  ENGLISH  UNEMPLOYMENT        ly 

Through  the  works  of  David  Ricardo  there  are  scat- 
tered references  to  subjects  that  are  today  looked  upon 
as  important  factors  in  unemployment,  but  Ricardo  does 
not  develop  them  as  such.  The  Malthusian  doctrine  of 
population  is  accepted  in  full.  The  maintenance  of  the 
poor  out  of  public  funds  is  severely  condemned,  the  Poor 
Law  of  the  day,  which  richly  deserved  censure,  being 
sharply  attacked.'  An  increase  in  population  is  looked 
upon  not  necessarily  as  causing  unemployment,  but  as 
lowering  wages  below  the  natural  price  until  the  num- 
ber of  the  poor  is  reduced  by  misery  so  that  wages 
can  again  rise.*  A  question  that  has  long  been  at  is- 
sue is  touched  upon  by  Ricardo  in  discussing  the  effects 
of  the  introduction  of  machinery.^  He  contends  that 
the  employment  of  machinery  always  leads  to  an  in- 
crease in  the  net  product  of  a  country,  but  not  neces- 
sarily to  an  increase  in  the  gross  product.  As  the  power 
of  employing  labor  depends  on  the  latter,  there  very 
often  results  a  diminution  in  the  demand  for  labor,  pop- 
ulation becomes  redundant,  and  there  is  distress  and 
poverty  among  the  laboring  class.  Later  economists 
took  issue  with  Ricardo  on  this  point.  His  general  atti- 
tude on  the  question  of  relieving  unemployment  is  shown 
where  he  endorses  a  statement  that  the  great  evil  of  the 
laborer's  condition  is  poverty,  resulting  either  from  the 
scarcity  of  food  or  of  work,  but  holds  that  the  state 
should  recognize  the  limitations  of  its  power  to  remedy 
these  conditions  by  legislation.'^  The  same  attitude  is 
shown  in  another  section  where  he  argues  that  the  dis- 
tress arising  from  a  revulsion  of  trade  is  a  necessary  evil 

^  David   Ricardo,    Principles  of  Political   Economy  and   Taxation 
(London  1881),  p.  58. 
^Ibid.y  p.  51.  ^ Ibid.,  pp.  235-242. 

^'Ibid.,  p.  58.     (Footnote.) 


l8    CONTEMPORARY  THEORIES  OF  UNEMPLOYMENT    [ig 

to  which  a  rich  nation  must  submit.'  This  acceptance 
of  the  maladjustments  of  the  industrial  system  and  of  the 
resulting  misery  as  a  necessary  feature  of  that  system  is 
characteristic  of  the  whole  Manchester  school. 

James  Mill  deals  with  none  of  the  subjects  connected 
with  the  problem  of  unemployment  except  in  bringing 
forward  the  Malthusian  theory  of  population  in  explain- 
ing wages. 

J.  R.  McCulloch,  like  his  predecessors,  attacks  the 
Poor  Law  for  its  tendency  to  derange  the  natural  relation 
between  the  supply  of  labor  and  the  demand  for  it,=^ 
shows  the  connection  between  population  and  fluctua- 
tions in  wage  rates,^  and  repeats  verbatim  Adam  Smith's 
statements  as  to  variations  in  wages  due  to  irregularity 
of  employment.'^  Of  chief  importance  is  his  attempt  to 
refute  Ricardo's  contention  that  the  introduction  of  ma- 
chinery tends  to  reduce  the  demand  for  labor.  McCul- 
loch holds  that  improvements  in  machinery  may  some- 
times force  workmen  to  change  their  employments,  but 
that  they  always  increase  the  gross  product,  and  therefore 
have  no  tendency  to  lessen  the  effective  demand  for  labor.5 

The  works  of  Nassau  Senior  are  notable  for  an  appre- 
ciation of  the  problem  of  unemployment  and  a  careful 
consideration  of  the  causes  of  unemployment.  In  some 
of  the  points  he  makes  he  anticipates  later  thought. 
His  disagreement  with  Adam  Smith  as  to  the  distress 
occasioned  by  irregularity  of  employment,  and  his  rather 
questionable  conclusion  as  to  the  joys  of  that  state  of  affairs 
have  been  noted.     Of  greater  validity  is  his  other  reason- 

^Ricardo,  op.  cit.,  p.  i6i. 

'J.    R.    McCulloch,   Principles  of  Political  Economy  (Edinburgh, 
1825),  p.  355. 
^Ibid.,  p.  344,  et  seq,  *Ibid.,  pp.  240-1. 

^Ibid.,  pp.  175-188. 


I^]     DEVELOPMENT  OF  ENGLISH  UNEMPLOYMENT        ig 

ing  on  the  subject.  To  the  development  of  manufactures 
and  the  division  of  labor  is  ascribed  the  phenomenon  of 
unemployment.  ''Few  principles  are  more  clearly  estab- 
lished," Senior  writes/  "than  that  the  productiveness  of 
labor  is  in  proportion  to  its  subdivision,  and  that  in  pro- 
portion to  that  subdivision  must  be  the  occasional  suf- 
fering from  want  of  employment."  Another  point  which 
Senior  mentions  is  first  made  by  him  among  the  econo- 
mists ;  that  is,  that  unemployment  is  in  part  due  to  lack 
of  mobility  on  the  part  of  labor.  "There  can  be  no 
doubt  that  we  have  among  our  institutions  and  our 
habits  much  that  fetters  and  misdirects  the  industry  of 
our  laborers ;  and  that  these  causes  frequently  occasion 
and  always  prolong  the  want  of  employment  to  which 
large  portions  of  our  laborers  are  frequently  exposed."  ^ 
A  striking  illustration  of  the  position  of  the  modern 
worker  is  given  by  Senior.  The  savage,  like  one  of  his 
own  instruments,  is  clumsy  and  inefficient  but  a  complete 
self-sufficing  unit  in  himself.  The  civilized  man,  like  a 
single  wheel  in  one  of  his  large  machines,  is  marvelously 
efficient  w^hen  combined  with  others,  but  alone  almost 
useless.3 

In  the  works  of  the  great  "  codifier  "  of  the  classical  eco- 
nomists there  is  nothing  new  on  the  subject  of  unemploy- 
ment. John  Stuart  Mill  accepts  the  Malthusian  doctrine  of 
population,'^  discussing  it  solely  in  its  effect  on  wages, 
quotes  Smith  on  the  irregularity  of  employment  as  tending 

^Nassau  William  Senior,  Political  Economy  (London,  1872),  p.  219. 

^Ibid.,  p.  218. 

^ Ibid.,  p.  219.  It  is  significant,  in  connection  with  these  theories  of 
Senior,  that  he  was  one  of  the  members  of  the  Royal  Commission  on 
the  Poor  Laws  of  1834,  the  rigorous  "  Principles  "  of  which  still  dom- 
inate English  poor  relief. 

*J.  S.  Mill,  Principles  of  Political  Ecpnomy  (New  York,  1864;  from 
Sth  London  edition),  p.  206. 


20    CONTEMPORARY  THEORIES  OF  UNEMPLOYMENT    [20 

to  increase  wages/  and  follows  McCulloch  in  denying 
Ricardo's  contention  that  the  conversion  of  circulating 
into  fixed  capital  can  injure  the  laboring  classes  in  the 
aggregate,  though  admitting  that  temporary  distress  may 
result.'' 

J.  E.  Cairnes,  in  developing  the  theory  of  non-com- 
peting groups  and  in  popularizing  Senior's  wage-fund 
doctrine,  makes  several  points  bearing  upon  the  prob- 
lem. An  increase  in  the  amount  of  fixed  capital  at 
the  expense  of  circulating  capital  will,  at  least  for  a  time, 
have  disastrous  results  in  the  development  of  pauperism, 
he  contends,  because  of  the  curtailment  of  the  wages 
fund  involved  in  this  change.^  However,  such  a  cur- 
tailment will  not  be  a  permanent  one,  since  *'.  .  .  the 
true  and  only  limit  to  the  employment  of  labor  is  in- 
creasing cost  of  production.  Increase  the  productive 
powers  of  industry,  extend  the  knowledge  of  the  indus- 
trial arts  which  support  and  comfort  mankind,  and  there 
is  little  danger  that  laborers  will  ever  fail  of  employment 
for  want  of  work  to  do."^  Cairnes  thus  holds  with  Mill 
and  McCulloch  that  distress  due  to  the  introduction  of 
machinery  will  be  merely  temporary,  involving  a  neces- 
sary change  in  the  distribution  of  labor,  but  not  a  falling- 
of¥  in  the  total  demand  for  labor. 

With  Cairnes  the  line  of  immediate  disciples  of  the 
Smith-Ricardo-Mill  school  of  economists  comes  to  an 
end.  Their  direct  contributions  to  the  study  of  the 
problem  of  unemployment  were  not  many.  The  three 
outstanding  ideas  on  the  subject  which  they  leave  us  are 
that  unemployment  is  compensated  by  higher  pay  and 

*Mill,  op.  cit.,  pp.  473-4- 

^ Ibid.,  pp.  130-6. 

'^J.  E.  Cairnes,  Political  Economy  (New  York,  1874),  p.  179. 

^Ibid.,  pp.  257-8. 


21  ]     DEVELOPMENT  OF  ENGLISH  UNEMPLOYMENT       2 1 

the  Opportunities  for  idleness,  that  it  is  due  to  a  surplus 
population,  and  that  it  is  a  necessary  concomitant  of  in- 
dustrial changes,  and  therefore  merely  temporary  in 
character.  Their  study  of  the  problem  was  not  inten- 
sive. Engaged  as  they  were  in  building  up  a  science  of 
political  economy  it  could  hardly  be  expected  that  they 
should  exhaustively  study  one  phase  of  the  subject.  Prop- 
agating, moreover,  the  idea  of  free  enterprise  and  laissez 
faire  in  industry,  they  were  not  likely  to  emphasize  a 
point  at  which  the  doctrine  of  absolutely  unrestricted 
business  enterprise  broke  down,  in  so  far  as  the  well-being 
of  the  working  classes  was  concerned.  It  was  on  these 
grounds,  in  part,  that  Bagehot  and  Jevons  and  Toynbee, 
who  followed  Cairnes,  broke  away  from  the  restrictions 
of  the  classical  school.' 

^For  a  brief  review  of  the  attitude  of  the  Manchester  school  toward 
the  problem  of  unemployment,  see  a  paper  by  Juliet  S.  Poyntz,  included 
in  Seasonal  Trades  by  Webb  and  Freeman,  (pp.  7-12).  It  is  rather  a 
severe  criticism  of  the  school  from  the  standpoint  of  a  Fabian  Socialist 
than  a  fair  review. 

W.  M.  Leiserson  gives  a  good  summary  of  the  views  of  the  early 
economists  in  an  article  in  the  Political  Science  Quarterly  for  March, 
1916  (vol.  xxxi,  no.  I,  pp.  5-9). 

The  views  on  the  subject  of  unemployment  of  some  of  the  lesser 
writers  of  the  classical  era,  notably  those  of  the  Ricardian  socialists,  are 
worthy  of  exposition,  but  the  scope  of  the  present  paper  prohibits  it. 

There  is  much  that  is  suggestive  of  labor  doctrines  concerned  with 
unemployment  in  the  socialist  writings  of  the  nineteenth  century, 
especially  in  the  works  of  Karl  Marx.  Marx'  analysis  may  be  briefly 
summarized. 

With  the  advance  of  accumulation  the  proportion  of  constant  (fixed) 
to  variable  (circulating)  capital  changes.  If  it  was  originally  1:1,  it  now 
becomes  successively  2:1,  3:1,  4:1,  5:1,  7:1,  etc.,  so  that,  as  the  capital 
increases,  instead  of  1-2  of  its  total  value,  only  1-3, 1-4,  1-5,  1-6,  \-%etc., 
is  transformed  into  labor  power.  Since  the  demand  for  labor  is  deter- 
mined only  by  the  variable  constituent  of  capital,  that  demand  falls 
progressively  with  the  increase  of  the  total  capital.  Capitalist  accumu- 
lation, therefore,  constantly  produces  a  relatively  redundant  population 
of  laborers— a  surplus  population.    This  surplus  labor  population  forms 


22    CONTEMPORARY  THEORIES  OF  UNEMPLOYMENT    [22 
2.  THE  ABLE-BODIED  UNDER  THE  ENGLISH  POOR  LAW 

While  the  problem  of  unemployment  is  one  that  must 
be  approached  from  the  standpoint  of  industry,  rather 
than  from  the  standpoint  of  the  Poor  Law  or  of  charit- 

a  disposable  industrial  reserve  army.  The  course  characteristic  of 
modern  industry,  viz.,  a  decennial  cycle  of  periods  of  average  activity, 
production  at  high  pressure,  crisis,  and  stagnation,  depends  on  the 
constant  formation,  the  greater  or  less  absorption,  and  the  reformation 
of  the  industrial  reserve  army,  or  surplus  population.  (In  their  turn 
the  varying  phases  of  the  industrial  cycle  recruit  the  surplus  population, 
and  become  one  of  the  most  energetic  agents  of  its  re-production). 
Moreover,  on  the  possibiHty  of  throwing  great  masses  of  men  suddenly 
on  the  decisive  points  without  injury  to  the  scale  of  production  in  other 
spheres,  depends  fluidity  and  transformability  of  capital.  The  whole 
form  of  the  movement  of  modern  industry  depends,  therefore,  upon  the 
constant  transformation  of  a  part  of  the  laboring  population  into  unem- 
ployed or  half-employed  hands.  The  over-work  of  the  employed  part 
of  the  working  class  swells  the  ranks  of  the  reserve.  Relative  surplus- 
population  is  the  pivot  upon  which  the  law  of  demand  and  supply  of  labor 
works. 

The  relative  surplus  population  exists  in  every  possible  form.  Every 
laborer  belongs  to  it  during  the  time  when  he  is  only  partially  employed 
or  wholly  unemployed.  There  are,  however,  three  general  forms — the 
floating,  the  latent,  and  the  stagnant.  The  floating  surplus  population 
is  found  in  the  centres  of  modern  industry,  among  the  laborers  who, 
repelled  and  then  attracted,  are  swayed  by  the  expansions,  contractions 
and  shiftings  of  production.  It  is  constantly  augmented  by  the  boys 
who  were  employed  up  to  maturity  and  then  turned  out,  for  capitalistic 
production  wants  constantly  larger  numbers  of  youthful  laborers,  smaller 
numbers  of  adults.  Of  its  members,  also,  are  the  thousands  who  are 
always  out  of  work,  even  when  there  is  a  complaint  of  the  want  of 
hands,  because  the  division  of  labor  chains  them  to  a  particular  branch 
of  industry.  The  latent  surplus  population  exists  in  the  rural  districts, 
where  capitalistic  production,  having  taken  possession  of  agriculture, 
has  forced  out  a  part  of  the  agricultural  population.  This  excess  is  there- 
fore constantly  on  the  point  of  passing  over  into  an  urban  or  man- 
ufacturing proletariat,  and  on  the  lookout  for  circumstances  favorable 
to  this  transformation.  The  third  category  of  the  relative  surplus  pop- 
ulation, the  stagnant,  is  that  part  of  the  active  labor  army  which  is 
characterized  by  extremely  irregular  employment,  furnishing  to  capital 
an  inexhaustible  reservoir  of  disposable  labor  power.  It  recruits  itself 
constantly  from  supernumerary  forces  of  modern  industry  and  agricul- 


23]     DEVELOPMENT  OF  ENGLISH  UNEMPLOYMENT       23 

able  administration,  it  is  yet  necessary  to  understand  the 
attitude  which  the  Poor  Law  administrators  have  taken 
in  order  to  view  in  the  proper  perspective  modern 
theories  and  remedies. 

Previous  to  1834  the  Poor  Law  passed  through  three 
distinct  periods,  the  division  into  periods  being  based 
upon  the  principles  dictating  Poor  Law  practice.  From 
early  times  the  poor  have  been  divided  into  two  classes, 
those  unable  to  earn  a  livelihood,  and  the  able-bodied, 
the  "sturdy  rogues  and  vagabonds."  It  was  with  the 
second  of  these  classes  that  the  Poor  Law  was  first  con- 
cerned, the  "deserving  poor"  being  left   to   churches, 

ture,  and  especially  from  those  decaying  branches  of  industry  where 
handicraft  'is  yielding  to  manufacture,  manufacture  to  machinery. 
There  is,  finally,  the  lowest  sediment  of  the  relative  surplus  population, 
the  "dangerous"  classes,  those  dwelling  in  the  sphere  of  pauperism. 
It  is  pauperism  which  is  the  hospital  of  the  active  labor-army  and  the 
dead  weight  of  the  industrial  reserve-army.  Das  /Capital,  chap,  xxv, 
sections  3-4,  (London,  1901),  pp.  642-664. 

Marx  anticipated  in  this  analysis  many  of  the  later  theories  as  to  the 
causes  of  unemployment,  as  will  develop  in  later  discussion. 

The  reasoning  of  the  other  socialists  of  the  day  was  rather  more  sup- 
erficial than  that  of  Marx,  though  tinged  with  the  same  intense  revolu- 
tionary flame.  The  principle  of  the  right  to  work  was  probably  first 
enunciated  in  France  by  Fourier  and  Considerant.  Upon  it  was  based 
the  scheme  of  employing  in  public  works  all  who  were  out  of  work, 
which  was  attempted  in  1848  (the  ateliers  nationaux).  The  matter  of 
seasonal  irregularity  was  first  studied  about  the  middle  of  the  century 
by  Louis  Blanc,  who  gathered  statistics  from  1500  work-people  in  830 
workshops  in  Paris,  as  to  their  daily  wage  and  the  number  of  months 
during  which  each  was  out  of  work  during  the  year.  Very  early  in  the 
nineteenth  century  Robert  Owen  in  England  was  earnestly  working 
to  relieve  the  distress  due  to  unemployment,  proposing  state  provision 
of  work  as  a  protection  against  the  misery  resulting  from  industrial 
fluctuations.  With  the  exception  of  the  contribution  made  by  Marx, 
the  chief  element  in  which  was  the  conception  of  a  mobile  army  as  a 
necessity  in  capitalistic  production,  there  is  nothing  of  exceptional  value 
to  present  study  in  the  works  of  the  early  socialists.  Cf.  Seasonal 
Trades,  pp.  11-16. 


24    CONTEMPORARY  THEORIES  OF  UNEMPLOYMENT    [24 

guilds,  and  private  charity.  Up  to  the  Act  of  Elizabeth 
in  1601  extremely  harsh  laws  for  the  suppression  of  vag- 
abondage were  in  force.  Under  the  Acts  of  1388  and 
1405  gaol  and  stocks,  with  bread  and  water  diet,  were 
the  mead  of  sturdy  beggars.^  The  Act  of  1531  made 
necessary  licenses  for  begging ;  he  who  was  caught  with- 
out a  license  was  "  to  be  beaten  with  whips  till  his  body 
be  bloody  by  reason  of  such  beating."  Scholars  of  Ox- 
ford and  Cambridge  begging  without  authorization  under 
the  seal  of  their  universities  were  to  be  punished  in  the 
same  way.  The  years  1547  and  1572  marked  even  more 
severe  penalties.  Branding,  the  enslavement  of  wives 
and  children,  and  death  were  some  of  the  punishments 
for  "  loitering,  idle  wanderers."  The  extreme  severity 
of  these  laws  of  course  prevented  their  strict  enforcement.'' 
The  second  of  the  early  periods  is  that  beginning  with 
the  Act  of  Elizabeth  in  160 1.  The  dominant  principles 
were,  first,  the  relief  of  the  lame,  impotent,  old,  blind 
and  other  poor  people  not  able  to  work,  and,  second,  the 
setting  to  work  of  those  having  no  ordinary  or  daily 
trade  of  life  by  which  to  get  their  living.  Funds  were 
to  be  provided  by  the  practically  compulsory  taxation  of 
every  inhabitant.  Every  parish  was  solely  responsible 
for  its  own  poor.  Laws  of  settlement  were  strictly  en- 
forced under  this  act,  to  prevent  the  flocking  of  the  poor 
to  the  parishes  where  they  were  best  treated.^  Parish 
poor   houses   first  came  into  being  during   this  period 

^Cf.  T.  Mackay,  The  English  Poor  (London,  1889),  pp.  112-116. 

"^ Ibid.,  pp.  118-121. 

'Such  laws,  however,  were  not  originated  at  this  time.  Measures 
restricting  the  mobility  of  labor  were  enforced  before  the  time  of  Wat 
Tyler  during  the  reign  of  Richard  II,  and  at  varying  intervals  there- 
after.    Cf.  Mackay,  op.  cii.,  pp.  1 12-13. 


25]     DEVELOPMENT  OF  ENGLISH  UNEMPLOYMENT       25 

because  of  the  need  for  a  test  to  prevent  promiscuous 
giving  by  local  justices.^ 

In  1782,  with  the  passage  of  Gilbert's  Act,  came  the 
beginning  of  the  form  of  poor-law  relief  to  which 
Malthus  and  other  of  the  early  economists  took  such 
strong  exception.  The  workhouse  test  was  abandoned. 
All  who  were  able  and  willing  to  work  were  to  be  pro- 
vided by  the  Poor  Law  Guardians  with  employment 
"  suited  to  their  capacity  and  near  the  place  of  their  resi- 
dence.'' Moreover,  they  were  "  to  be  properly  main- 
tained and  provided  for  until  such  employment  were 
secured,"  and  the  deficiencies  of  the  earnings  of  such 
work,  if  not  enough  for  maintenance,  were  to  be  made 
up  to  them.  Striking  evils  ensued.  Money  and  food 
were  doled  out  liberally,  often  without  a  labor  test.  In 
one  place  an  independent  laborer,  by  hard  work,  could 
earn  12  shillings  a  week,  while  a  pauper,  for  nominal 
work,  received  16  shillings  a  week.  In  some  places 
people  were  forced  by  law  to  employ  and  pay  a  number 
of  laborers,  the  number  being  based  upon  the  amount  of 
their  property.""  The  poor-rate  assessment  became  very 
high  with  these  heavy  drains  upon  it.  The  evil  effects 
of  the  system,  in  the  degradation  of  the  working  classes, 
in  the  fostering  of  an  inefficient  laboring  force,  and  in 
the  encouragement  it  gave  to  an  excessive  growth  of 
population  have  been  widely  advertised  since  the  break- 
down of  the  old  law.3     In  1834,  following  the  Report  of 

^T.  Mackay,  Public  Relief  of  the  Poor  (London,  1901).  An  interest- 
ing account  of  the  economic  background  of  the  Act  of  Elizabeth  is  given 
on  pp.  18-34. 

'Instances  taken  from  J.  S.  Nicholson,  Principles  of  Political  Eco- 
nomy (London,  1893),  pp.  371-81. 

T/.,  Great  Britain,  Report  of  the  Royal  Commission  on  the  Poor 
Law,  (London,  1834),  pp.  77-98. 

An  especial  problem  which  developed  during  this  period  was  that  of 


26    CONTEMPORARY  THEORIES  OF  UNEMPLOYMENT    [26 

the  Royal  Commission  on  the  Poor  Laws  appointed  to 
investigate  these  conditions,  the  Act  of  1834  was  passed. 

The  Report  of  the  Commission  of  1834  and  the  laws 
passed  to  carry  out  the  principles  therein  embodied  deal 
chiefly  with  the  able-bodied,  for  the  evils  of  the  pre- 
ceding period  had  grown  up  primarily  around  the  system 
for  relieving  this  class.  In  considering  the  Report  it  is 
necessary  to  remember  that  it  came  as  a  reaction  against 
the  former  system  of  allowances,  and  in  an  age  when  the 
doctrine  of  laissez  faire  dominated  the  economists  and 
the  statesmen.  That  the  principles  it  put  forward  were 
excessively  severe  upon  the  individual  pauper  or  unem- 
ployed man  is  therefore  not  surprising. 

The  dominating  principle  of  the  Report  is  that  which 
is  known  as  *' less  eligibility."  **The  first  and  most 
essential  of  all  conditions  is  that  his  (/.  <?.,  the  individual 
relieved)  situation  on  the  whole  shall  not  be  made  really 
or  apparently  so  eligible  as  the  situation  of  the  indepen- 
dent laborer  of  the  lowest  class." '  Two  proposals  for 
the  actual  administration  of  relief  are  based  upon  this 
general  principle. 

I.  That  outdoor  relief  to  the  able-bodied  and  their 
families  be  discontinued  (with  certain  minor  excep- 
tions). 

the  agricultural  laborer.  The  decay  of  the  yeomanry,  which  set  in 
about  1760  with  the  enclosure  of  the  commons  and  the  displacement 
of  home  manufactures  by  the  factory  system,  and  the  concomitant 
development  of  a  proletarian  class,  gave  rise  to  the  most  pressing  of 
the  problems  the  Poor  Law  adminstrators  had  to  face.  The  whole 
question  of  agricultural  conditions  has  been,  and  continues  to  be,  an 
important  factor  in  the  problem  of  unemployment,  both  directly  and 
indirectly  through  its  relation  to  the  influx  of  rural  workers  to  the 
cities.  It  is  admirably  treated  by  Miss  O.  J.  Dunlap,  The  Farm  Lab- 
orer— The  History  of  a  Modern  Problem  (London,  191 3).  Cf.  especi- 
ally in  this  connection,  pp.  1-90. 
^Report  of  the  Royal  Commission  on  the  Poor  Laws  ri834),  p.  228. 


2y]     DEVELOPMENT  OF  ENGLISH  UNEMPLOYMENT       27 

2.  That  relief  be  offered  to  able-bodied  persons  and 
their  families  only  in  well-regulated  workhouses. 

The  two  fundamental  principles,  therefore,  are  those  of 
"less  eligibility"  and  of  a"  workhouse  system."  Added 
to  these  is  a  third,  that  of  "  national  uniformity,"  a  cen- 
tral administrative  board  being  recommended.'  It  is 
important  to  note  that  the  principle  of  ''less  eligibility" 
included  the  doctrines  that  those  helped  by  the  parish 
should  work  *'  as  hard  and  for  less  wages  than  indepen- 
dent laborers  work  for  individual  employers," '  and  that 
the  able-bodied  be  subjected  to  "  such  courses  of  labor 
and  discipline  as  will  repel  the  indolent  and  vicious."  ^ 

The  most  striking  feature  of  the  Poor  Law  Report  of 
1834,  at  least  from  the  point  of  view  of  the  present  study, 
is  the  fact  that  in  a  period  when  the  number  of  "  legiti- 
mately "  unemployed  and  underemployed  was  excessively 
large,  according  to  contemporary  evidence  as  to  indus- 
trial conditions,  absolutely  no  distinction  was  made  be- 
tween the  unemployed  man  and  the  vagrant  or  pauper/ 
The  policy  of  rigorous  deterrence  was  to  be  applied 
without  discrimination  to  all  who  were  in  need  of  public 
assistance,  no  matter  what  the  cause  of  their  poverty 
might  be.  The  key  to  this  attitude  is  found  in  the 
theory  as  to  the  cause  of  unemployment  which  was  held  by 
the  members  of  the  Commission.  The  "  surplus  labor  " 
theory  had  dominated  previous  relief  systems,  being  the 
popular  contemporary  explanation  of  the  phenomenon  of 
unemployment.  If  there  were  more  workers  than  there 
was  work,  it  was  held  by  those  administering  relief  prior 
to   1834   that   the  community   should   take  care  of  the 

'^Report  of  the  Royal  Commtssion  on  the  Poor  Laws  (1834),  p.  297. 
^ Ibid.,  p.  262.  ^ Ibid.,  p.  307. 

*C/.  S.  and  B.  Webb,  Minority  Report  of  the  Poor  Law  Commis- 
sion (London,  1909),  part  ii,  p.  3. 


28    CONTEMPORARY  THEORIES  OF  UNEMPLOYMENT    [28 

surplus.  The  whole  policy  of  the  Commission  of  1834 
was  based  upon  the  belief  that  individual  unemployment 
was  due  to  individual  faults,  that  ability  and  industry 
could  always  find  a  market.'  In  regard  to  the  "  surplus 
labor"  theory,  the  Report  states  that  even  "after  a  sys- 
tem of  administration,  one  of  the  most  unquestionable 
effects  of  which  is  the  encouragement  and  increase  of 
improvident  marriages  among  the  laboring  class,  has 
prevailed  in  full  vigor  for  nearly  forty  years  "  there  is  no 
real  surplus  in  the  kingdom  as  a  whole."" 

A  recommendation  which  is  of  interest  in  its  bearing 
upon  unemployment  relief,  and  which  is  somewhat  incon- 
sistent with  this  denial  of  a  labor  surplus,  is  made  by  the 
Commission  in  empowering  the  vestry  of  each  parish  "  to 
pay  out  of  the  poor  rates  the  expenses  of  emigration  of 
any  persons  having  settlements  within  that  parish  who 
may  be  willing  to  emigrate.'^  ^  Xhis  recommendation  is 
explained  by  the  statement  that  there  may  be  a  tempo- 
rary, surplus  of  labor  in  certain  districts. 

The  scope  of  this  paper  prohibits  a  detailed  description 
of  the  working-out  of  the  principles  of  1834  during  the 
last  eighty  years.  Nominally  the  principles  still  dictate 
the  relief  of  all  classes  of  destitute  persons,  with  the  ex- 
ception of  certain  classes  of  the  unemployed  who  are 
provided  for  by  the  Unemployed  Workman  Act  of  1905. 
In  fact  there  have  been  various  changes  in  practice  since 
that  time.  Such  of  these  as  apply  to  the  able-bodied 
may  be  briefly  enumerated. 

The  difficulty  of  enforcing  the  strict  prohibition  of  out- 
door relief  broke  dovvn   that   policy,  except   in   certain 

^  Cf.,  Great  Britain,  Report  of  Royal  Commission  on  the  Poor  Laws 
and  the  Relief  of  Distress  (London,  1909),  part  iv,  chap.  9. 
"^Report  of  Poor  Law  Commission  of  1834,  pp.  351-2. 
^ Ibid.,  V.  z^i,  et  seq. 


29]     DEVELOPMENT  OF  ENGLISH  UNEMPLOYMENT       29 

districts,  even  before  it  had  ever  been  rigidly  enforced. 
In  1842  an  Outdoor  Labor  Test  Order  was  promulgated, 
permitting  the  giving  of  work  to  able-bodied  men  at 
wages,  under  certain  conditions  and  in  certain  parishes. 
In  1852  this  order  was  embodied  in  the  Outdoor  Relief 
Regulation  Order,  which  is  still  in  force.  The  absolute 
prohibition  of  outdoor  relief  still  applies,  however,  to 
some  sections  of  England  and  Wales. 

The  workhouse  system,  which  was  recommended  by 
the  Commission  of  1834  for  universal  application  to  all 
able-bodied  men  seeking  relief,  is  now  applied  universally 
to  one  class  only,  the  wayfarers  or  vagrants,  for  whom 
a  system  of  casual  wards  has  grown  up  all  over  England. 
The  General  Workhouse  Order  of  1847,  which  provided 
that  all  able-bodied  inmates  of  workhouses  should  do  ten 
hours  work  in  summer  and  nine  in  winter,  each  day,  at 
such  work  as  stone-breaking  and  oakum-picking'  still 
applies  to  much  of  the  work  done  in  these  casual  wards. 
Compulsory  detention  for  a  certain  period  is  prescribed 
in  some  districts  for  all  who  may  apply.  The  policy  of 
1834  in  all  its  severity  still  governs  these  casual  wards. 

The  principle  of  'Mess  eligibility'*  as  a  dominant 
factor  has  been  broken  down  in  practically  all  parts  of 
Poor  Law  administration  except  that  dealing  with  the 
vagrant  class.  Other  types  of  the  able-bodied  have  the 
opportunity  either  to  secure  outdoor  relief  with  a  labor 
test,  or  to  secure  employment  at  wages  under  a  Distress 
Committee.^  In  both  cases  they  are  in  a  position  rather 
more  eligible  than  that  of  the  lowest  grade  of  manual 
worker. 

The   most  important  single  point  of  departure  from 

*C7.  Sidney  and    Beatrice  Webb,  English  Poor  Law  Policy  (Lon- 
don, 1909),  pp.  74-5- 
'  Cf.  infra  ch.  i,  sec.  3. 


30    CONTEMPORARY  THEORIES  OF  UNEMPLOYMENT    [30 

the  principles  of  1834,  in  so  far  as  the  question  of  unem- 
ployment is  concerned,  was  that  marked  by  the  Circular 
of  1886  sent  out  by  Joseph  Chamberlain,  then  president 
of  the  Local  Government  Board.  It  is  of  supreme  im- 
portance in  its  relation  to  all  later  unemployment  relief 
in  that  it  first  makes  an  official  distinction  between 
"  able-bodied  destitution  "  and  ''  able-bodied  pauperism," 
marking  the  inauguration  of  "  a  policy  of  discrimination 
between  some  able-bodied  applicants  and  others  accord- 
ing to  their  character  and  circumstances  with  a  view  to 
the  rehabilitation  of  the  man  really  seeking  work." '  In 
the  Circular  and  in  his  letters  concerning  it,  Mr.  Cham- 
berlain urged  that  the  working  men  who  were  in  distress 
because  of  the  prevailing  industrial  depression  be  not 
familiarized  with  poor-law  relief.  The  workhouse  test 
and  the  labor  test  were  to  be  upheld  for  the  able-bodied 
pauper,  but  for  the  unemployed  wage-earner  different 
methods  of  relief  were  necessary.  The  Circular  requested 
the  local  boards  of  guardians  "  to  expedite  as  far  as 
practicable  the  commencement  of  any  public  works 
which  they  may  be  contemplating,  so  that  additional 
employment  may  be  afforded."  "^  Only  once  before,  in  the 
case  of  the  Lancashire  cotton  famine,  1863-6,  had  such 
provision  of  public  work  for  the  unemployed  been  con- 
sidered.3  It  is  to  be  noted  that  in  first  recommending 
this  plan,  Mr.  Chamberlain  advised  that  wages  given  on 
these  works  be  somewhat  below  the  normal  level. 

The  principle  of  discrimination  between  unemployed 
types,  and  that  of  providing  work  for  the  industrial  un- 
employed, were  endorsed  by  a  special  committee  of  the 
House  of  Commons  in  1895,  and  furnished  the  basis  for 

^English  Poor  Law  Policy,  p.  172. 
'Quoted,  Ibid.,  p.  165. 
^ Ibid.,  pp.  Q2-3. 


31  ]     DEVELOPMENT  OF  ENGLISH  UNEMPLOYMENT       31 

Mr.  Long's  Unemployed  Workman  Act  of  1905.  The 
working-out  of  the  principles  will  be  briefly  touched 
upon  in  describing  that  act,  which  provided  new  ma- 
chinery outside  the  Poor  Law  for  caring  for  a  large 
element  of  the  unemployed.  The  casual  ward,  the  labor 
yard,  and  the  general  mixed  workhouse  still  remain 
under  the  Poor  Law  as  agencies  for  caring  for  many 
types  of  unemployed  men. 

Through  all  the  history  of  the  English  Poor  Law, 
with  its  swings  from  the  side  of  haphazard  and  indiscrim- 
inate giving  to  that  of  rigorous  and  indiscriminate  de- 
terrence and  semi-penal  and  indiscriminate  detention, 
there  does  not  once  appear  a  dictating  policy  based  upon 
a  scientific  study  of  the  able-bodied  unemployed  man, 
and  upon  a  comprehension  of  the  fact  that  there  are 
many  types  and  many  causes  for  destitution.  Rather 
does  it  rest  upon  unreasoned  assumptions  as  to  the 
causes  for  the  existence  of  destitution.  Perhaps  the 
distinctive  feature  of  poor-law  policy  until  the  time  of 
Mr.  Chamberlain  was  complete  absence  of  discrimination. 
It  was  not  until  those  in  charge  of  poor-law  relief  began 
to  discern  the  complexity  of  the  causes  of  unemploy- 
ment, began  to  realize  that  the  roots  of  unemployment 
lie  outside  the  individual  and  within  the  industrial  sys- 
tem itself,  that  progress  began  to  be  made.  As  yet,  the 
conception  of  outside  causes  and  the  practice  of  discrim- 
ination in  administration  have  been  applied  within  a  lim- 
ited sphere  only.  The  Unemployed  Workman  Act  of 
1905  represents  an  important  step  in  the  new  direction. 

3.  THE  UNEMPLOYED  WORKMAN  ACT 

The  Circular  of  1886,  which  urged  that  unemployed 
workingmen  be  dealt  with  outside  the  Poor  Law,  through 
the  provision  of  work  at  wages   by  the  municipalities, 


32    CONTEMPORARY  THEORIES  OF  UNEMPLOYMENT    [32 

has  been  mentioned.  From  1886  to  1905  this  method 
was  adopted  more  or  less  extensively  by  municipalties 
throughout  the  kingdom.  The  funds  were  largely  raised 
by  public  subscription.  Various  difficulties,  mentioned 
below,  were  encountered.  In  1905  a  plan  based  upon 
this  general  method  of  caring  for  the  unemployed,  but 
designed  to  do  away  with  some  of  its  faults,  was  put 
forward  by  Walter  Long,  then  president  of  the  Local 
Government  Board,  and  was  passed  by  Parliament  as 
the  Unemployed  Workman  Act.  The  main  features  of 
the  Act  were  these  : ' 

1.  Distress  committees  expressly  for  dealing  with 
unemployment  were  to  be  established  by  every  borough 
council  in  London,  and  by  every  council  in  other  cities 
having  a  population  in  excess  of  50,000.  These  distress 
committees  were  to  be  in  no  way  connected  with  the 
Poor  Law. 

2.  The  expenses  of  these  committees  were  in  part  to 
be  met  by  public  subscription  and  in  part  provided  out 
of  the  rates  (the  public  money). 

3.  Regular  workers  temporarily  out  of  work,  not 
casual  laborers,  were  to  be  aided  by  the  distress  com- 
mittees, in  any  of  the  following  ways : 

a.  By  assisting  workers  to  emigrate  or  migrate. 

b.  By  the  provision  of  temporary  work  (of  actual 
and  substantial  utility,  at  a  wage  below  the 
normal  wage  for  unskilled  labor). 

c.  By  the  establishment  of  farm  colonies. 

d.  By  the  organization  of  a  system  of  registering 
employers  wanting  workers  and  workers  want- 
ing work  (public  labor  exchanges). 

^Report  of  Royal  Commission  on  the  Poor  Laws,  1909,  vol.  i,  pp. 
490-504. 


33]     DEVELOPMENT  OF  ENGLISH  UNEMPLOYMENT       33 

The  Unemployed  Workman  Act  was  designed  to  carry 
out  Mr.  Chamberlain's  principle  of  discrimination,  by 
selecting  the  "  elite  of  the  unemployed,"  the  men  from  per- 
manent situations,  and  giving  them  the  means  for  tempo- 
rary support  while  reHeving  them  of  the  necessity  of  falling 
upon  the  Poor  Law.  In  addition,  its  framers  contem- 
plated a  national  system  of  information  bureaus  for  dis- 
tributing the  labor  of  the  country.  The  whole  system 
of  relief  under  this  act  was  made  national  in  its  scope 
in  the  hope  of  doing  away  with  the  haphazard,  disunited 
methods  that  had  characterized  this  method  of  relief 
when  administered  by  the  various  municipalities. 

Brief  reference  may  be  made  here  to  certain  of  the  ill 
effects  of  the  Unemployed  Workman  Act,  and  to  certain 
of  the  respects  in  which  the  hopes  of  its  proposers  have 
not  been  realized. 

The  labor  exchanges  contemplated  by  the  Act  were 
founded  nowhere  but  in  the  city  of  London.  There  they 
met  with  a  considerable  degree  of  success,  even  though 
limited  in  their  scope  by  the  failure  of  other  cities  to 
establish  co-operating  branches,  and  formed  the  basis 
for  the  national  system  of  exchanges  established  in  1909.' 

The  farm  colonies  established  under  the  Act,  especi- 
ally that  at  Hollesley  Bay,  were  partially  successful,  in 
that  those  who  were  sent  to  these  colonies  were  tempo- 
rarily helped.  However,  the  relief  given  in  this  way  was 
very  costly,  and  had  no  lasting  effect,  those  that  were 
helped  being  allowed  to  lapse  back  into  destitution  after 
leaving  the  farms. 

The  evils  of  the  relief  works  that  had  been  established 
by  the  various  separate  municipalities  in  accordance  with 
Mr.  Chamberlain's  suggestions  were  in   the  main  per- 

*  Cf.,  infra,  pp.  36-38. 


34    CONTEMPORARY  THEORIES  OF  UNEMPLOYMENT    [34 

petuated  in  the  works  started  by  the  distress  commit- 
tees. Complete  discrimination,  with  the  elimination  of 
the  confirmed  casual  was  impossible;  thus  to  a  very 
large  proportion  of  the  men  helped  the  work  given  by 
the  cities  was  nothing  other  than  another  casual  job, 
which  tended  to  continue,  rather  than  stamp  out  the 
vicious  system  of  casual  employment.  This  evil  was  in- 
tensified by  the  fact  that  such  a  large  number  were 
registered  in  the  periods  of  distress  that  each  one  could 
be  given  only  a  brief  dole  of  work,  which  was  of  little 
material  aid.  The  costs  of  the  works  carried  on  under 
this  system  were  extravagantly  high,  because  of  the  in- 
efficiency of  many  of  the  men  in  the  class  of  work  given 
them,  and  the  disorganization  of  the  working  forces. 
Perhaps  the  worst  evil  that  developed  in  connection 
with  the  public  relief  works  was  the  forestalling  of  or- 
dinary work,  the  displacement  of  the  regular  workers  by 
men  of  less  efficiency  from  other  trades.^ 

The  majority  of  the  Poor  Law  Commission  of  1905-9 
considered  the  evils  of  the  Unemployed  Workman  Act 
so  far  to  outweigh  its  advantages  that  they  recom- 
mended its  discontinuance.  The  minority,  however, 
contended  that  until  a  more  adequate  scheme  for  caring 
for  the  unemployed  had  been  put  into  effect,  the  Unem- 
ployed Workman  Act  should  be  continued  in  operation. 

Notwithstanding  the  difficulties  it  encountered  and 
the  numerous  evils  that  developed  in  connection  with 
its  operation,  the  Unemployed  Workman  Act  undoubt- 
edly served  an  important  purpose  in  sharply  differentiat- 
ing the  methods  of  caring  for  the  unemployed,  as  such, 

^  For  criticisms  of  the  Act  cf.  Report  of  the  Royal  Commission  on  the 
Poor  Law  (1909),  pp.  494-504.  Also  appendix  to  Report  of  Royal  Com- 
mission, vol.  xix.  For  a  more  favorable  criticism,  cf.  the  Minority 
Report  (London,  1909),  part  ii,  pp.  133-162. 


I 


35]     DEVELOPMENT  OF  ENGLISH  UNEMPLOYMENT       35 

from  the  ordinary  methods  of  reUeving  pauperism,  sick- 
ness and  poverty,  and  in  emphasizing  the  necessity  of 
discrimination,  even  though  in  practice  complete  discrim- 
ination could  not  be  secured.  It  set  up  the  problem  of 
unemployment  as  a  separate  problem,  requiring  separate 
study  and  treatment.  On  the  problem  itself,  as  Bever- 
idge  points  out,  it  has  made  no  appreciable  impression. 
Even  in  its  failure,  however,  it  performed  the  great 
service  of  demonstrating  ''.  .  .  the  inadequacy  of  all  mea- 
sures which,  like  itself,  leave  industrial  disorganization 
untouched  and  deal  only  with  the  resultant  human 
suffering." ' 

^W.  H.  Beveridge,  Unemployment:  a  Problem  of  Industry  (Lon- 
don 1912),  p.  191. 

Cf.  pp.  162-191  for  a  careful  criticism  by  a  man  who  was  closely  in 
touch  with  the  practical  working  out  of  the  Unemployed  Workman 
Act. 

Cf.  also,  /Report  to  Legislature  of  the  State  of  New  York  by  the  Com^ 
mission  to  inquire  into  the  Question  of  Employers'  Liability  and 
Other  Matters.  Third  Report,  Unemployment  and  Lack  of  Farm 
Labor  (April  26,  191 1),  pp.  71-83.  A  very  complete  analysis,  especially 
illuminating  on  the  work  of  the  farm  colonies  in  England.  On  pp. 
130-3  of  this  same  (N.  Y.)  report  the  text  of  the  Unemployed  Work- 
man Act  is  given. 

Mention  should  be  made  of  another  factor  which  has  from  time  to 
time  been  of  importance  in  the  relief  of  the  unemployed — that  is,  the 
work  of  voluntary  agencies.  The  giving  of  charity  of  this  type  has 
been  based  upon  the  belief,  on  the  part  of  the  movers  in  the  various 
schemes,  that  the  Poor  Law  was  inadequate  for  dealing  with  the  able- 
bodied  unemployed.  This  work  has  consisted  either  of  the  collection 
of  emergency  relief  funds,  to  be  dispensed  with  or  without  the  require- 
ment of  work,  or  of  the  establishment  of  shelters  and  labor  homes. 
The  most  important  instance  of  the  direct  dispensation  of  funds  gathered 
in  this  way  is  that  of  the  famous  Mansion  House  Fund  of  1885-6. 
Nearly  ;^8o,ooo  was  distributed  in  London  during  that  winter,  in  a 
most  haphazard  and  undiscriminating  manner.  "There  are  men  still 
living  among  the  unemployed  of  today  who  can  recall  with  regret  those 
golden  days"  (Beveridge,  p.  158).  The  demoralizing  effects  of  this 
"orgie  of  relief"  were  felt  for  years.     In  1904-5  another   Mansion 


36    CONTEMPORARY  THEORIES  OF  UNEMPLOYMENT    [36 
4.    BOARD  OF  TRADE  LABOR  EXCHANGES 

Since  1905  there  have  been  two  important  develop- 
ments in  England  in  connection  with  the  problem  of 
unemployment :  the  passing  of  the  Labor  Exchanges 
Act  in  1909  and  of  the  National  Insurance  Act  in  191 1. 
Brief  outlines  of  the  essential  features  of  these  acts  are 
given,  as  the  measures  have  an  important  bearing  upon 
the  course  of  discussion  concerning  the  problem  being 
reviewed. 

.  The  labor  exchanges  which  were  authorized  to  be 
established  by  the  distress  committees  in  the  various 
municipalities  of  Great  Britain,  under  the  Unemployed 
Workman  Act,  were  in  fact  put  into  operation  only  in 
London,  where  they  met  with  a  limited  degree  of  suc- 
cess. In  1909  the  government  proposed  a  bill  creating 
a  national  system  of  labor  exchanges  under  the  Board  of 

House  Fund  was  gathered.  Farm  colonies  were  established  at  Osea 
Island  and  Hadleigh,  outside  of  London.  In  return  for  work  done 
there  by  married  men,  who  had  previously  been  in  regular  employment, 
their  families  were  given  relief  in  London.  Far  more  satisfactory  re- 
sults were  obtained.  Similar  funds  were  gathered  at  various  times  in 
other  cities,  being  dispensed,  in  the  main,  in  a  way  that  did  more  harm 
than  good. 

Such  shelters  as  have  been  established  by  private  parties  have  been 
under  the  control  of  the  Salvation  Army,  the  Church  Army,  and  minor 
religious  bodies.  In  most  cases  relief  in  these  places  is  given  without 
the  exaction  of  work,  there  being  thus  a  competition  between  lax,  un- 
disciplined private  shelters  and  harshly  severe  casual  wards.  The 
most  notable  accomplishment  of  religious  bodies  has  been  the  establish- 
ment of  fairly  successful  rural  colonies  in  certain  places. 

For  descriptions  of  voluntary  agencies  for  relieving  the  unemployed, 
see,  Minority  Report,  Royal  Commission  on  the  Poor  Laws,  part  ii, 
pp.  99-114;  Report  of  Royal  Commission  oyi  the  Poor  Laws,  part  vi, 
ch.  3,  pp.  468-481  and  Beveridge,  op.  cit.,  pp.  157-162. 

A  very  full  description  of  the  working  of  all  agencies  outside  the 
Poor  Law  for  dealing  with  unemployment  is  given  in  appendices,  vol- 
umes 19,  19A  and  19B  to  the  Report  of  the  Royal  Commission  on  the 
Poor  Laws  containing  the  findings  of  Cyril  Jackson  and  J.  C.  Pringle. 


37]     DEVELOPMENT  OF  ENGLISH  UNEMPLOYMENT       37 

Trade.  It  was  passed  with  practically  no  opposition. 
The  chief  provisions  of  the  Act/  which  is  very  brief,  and 
of  the  code  of  regulations  drawn  up  under  the  Act,  are 
as  follows : 

1.  The  Board  of  Trade  may  establish  labor' exchanges, 
and  such  other  agencies  as  they  think  fit,  for  the  collec- 
tion and  furnishing  of  information  as  to  employers  re- 
quiring work-people  and  work-people  seeking  employ- 
ment. 

2.  The  power  of  establishing  labor  exchanges  without 
the  sanction  of  the  Board  of  Trade  is  taken  away  from 
the  distress  committees. 

3.  Local  representative  advisory  committees,  on  which 
are  representatives  of  both  employers  and  workmen,  may 
be  appointed  in  each  district  to  advise  and  assist  the 
Board  of  Trade  in  the  management  of  the  district  labor 
exchange. 

4.  Neutrality  in  trade  disputes  is  provided  for. 

5.  No  fees  are  to  be  charged  either  to  employers  or 
workmen. 

6.  TraveHng  expenses  may  be  loaned  to  work-people 
traveling  to  employment  found  for  them  through  a  labor 
exchange. 

Provision  was  later  made  for  the  separate  registration 
of  juvenile  applicants  for  employment,^  and  for  close  co- 
operation with  the  education  authorities  for  the  place- 
ment of  juvenile  workers.^     The  task  of  communicating 

^  Cf.,  Report  on  Unemployment,  etc.  (N.  Y.),  pp.  134-40,  for  the  text 
of  the  Labor  Exchanges  Act,  the  regulations  drawn  up  under  it,  and 
the  schedules  used  by  the  labor  bureaus. 

The  text  of  the  Act  is  also  given  in  Beveridge— Appendix  E,  p.  279, 
et  seq. 

^Beveridge,  pp.  289-90. 

^Ibid.,  pp.  285-8. 


38    CONTEMPORARY  THEORIES  OF  UNEMPLOYMENT    [38 

with  parents  and  of  advising  young  persons  as  to  the 
work  for  which  they  are  adapted  is  in  the  hands  of  the 
local  education  authority,  while  that  of  registering  the 
actual  applications  for  employment  and  bringing  the 
appHcants  into  touch  with  employers  is,  in  the  main,  in 
the  hands  of  the  labor  exchanges.  Special  voluntary 
advisory  committees  for  juvenile  work  are  provided  for. 
The  main  characteristic  of  the  labor  exchanges  being 
established  under  the  Act  is,  in  the  words  of  the  gen- 
eral manager  of  the  system,  that  they  are"  national,  indus- 
trial (not  eleemosynary),  free,  voluntary,  and  impartial."  ' 

5.  THE  NATIONAL  INSURANCE  ACT 

In  December,  191 1,  the  English  National  Insurance 
Bill'  became  a  law.  The  Act  went  into  operation  on 
July  15,  1912,  and  the  payment  of  benefits  under  it  began 
on  January  15,  1913.  Provisions  for  sickness  insurance 
and  unemployment  insurance  are  made  by  the  Act. 
The  chief  provisions  concerning  the  granting  of  unem- 
ployment insurance  are  as  follows : 

I.  Work-people  (skilled  or  unskilled,  organized  or  un- 
organized) in  the  following  trades  are  compulsorily 
insured  against  unemployment :  (a)  Building;  (b)  Con- 
struction of  works;  (c)  Mechanical  Engineering ;  (d) 
Shipbuilding;  (e)  Ironfounding ;  (f)  Construction  of 
vehicles ;   (g)  Sawmilling. 

-  National  Conference  on  the  Prevention  of  Destitution;  Papers  and 
Proceedings  (London,  191 1),  p.  397. 

For  discussions  of  the  working  of  the  labor  exchanges  cf.  National 
Conference  on  Prevention  of  Destitution,  pp.  215-72,  394-432. 

Beveridge,  op.  cit.,  pp.  291-306. 

Report  on  Unemployment,  etc.,  (N.  Y.),  pp.  82-92.  A  careful  and 
comprehensive  though  brief  report  on  the  English  system. 

'For  the  text  of  the  Act  see  David  Lloyd  George,  The  People's  In- 
surance (London,  191 1),  pp.  144-160,  168-171. 

Cf.  also,  Beveridge,  Appendix  F,  pp.  314-334. 


39]     DEVELOPMENT  OF  ENGLISH  UNEMPLOYMENT       39- 

These  trades  are  in  the  two  main  groups  of  building 
and  engineering,  the  occupations  which  are  most  pre- 
carious, in  that  they  are  subject  to  very  considerable 
seasonal  and  cyclical  fluctuations.  Lloyd  George  esti- 
mated that  about  one-sixth  of  the  industrial  population 
of  England  would  be  insured  under  the  Act. 

2.  The  machinery  of  administration  is  made  up  of  the 
previously  existing  labor  exchanges,  and  the  existing 
trade  unions  giving  unemployment  benefits. 

3.  Compulsory  contributions  of  2jd.  a  week  are  paid 
by  each  workman  and  by  employers  for  each  employee 
during  the  period  of  employment.  No  contributions 
are  required  while  the  workman  is  unemployed. 

4.  An  amount  equal  to  one-third  of  the  total  contri- 
butions from  workmen  and  employers  (one-fourth  of 
the  total)  is  to  be  paid  into  the  fund  by  the  state. 

5.  Abatements  amounting  to  over  50  per  cent  of  their 
total  contributions  are  allowed  to  employers  who  will 
insure  their  workmen  for  a  year  at  a  time.  This  large 
rebate  is  given  in  order  to  encourage  employers  to  give 
their  men  regular  employment,  and  to  discourage  casual 
employment. 

6.  Benefits  of  seven  shillings  a  week  in  the  engineer- 
ing trades  and  six  shillings  a  week  in  the  building  trades 
for  a  maximum  period  of  fifteen  weeks  of  unemployment 
during  any  twelve  months  are  provided  for,  subject  to 
certain  restrictions  to  prevent  fraud  and  malingering. 

7.  Trade  unions  in  the  compulsorily  insured  trades, 
which  pay  out-of-work  benefits,  will  be  repaid  from  the 
insurance  funds  that  amount  of  their  benefits  which 
their  members  would  have  been  entitled  to  draw  had 
they  received  their  insurance  directly. 

8.  Trade  unions  in  other  trades,  which  pay  out-of- 
work  benefits,  may  receive  from    the  general  insurance 


40    CONTEMPORARY  THEORIES  OF  UNEMPLOYMENT    [40 

fund  an  amount  equal  to  one-sixth  of  tl^eir  disbursed 
benefits,  provided  that  an  amount  not  in  ^cess  of  two 
shillings  a  week  per  unemployed  member  shall  be  paid 
to  the  unions  from  the  general  fund.  This  method  of 
aiding  voluntary  unemployment  insurance  is  one  of  the 
essential  features  of  the  Act. 

The  inauguration  of  this  system  of  unemployment  in- 
surance is  of  such  recent  date  that  a  judgment  as  to 
success  would  be  premature.' 

This  brief  resume  of  the  National  Insurance  Act  brings 
to  an  end  the  summary  treatment  of  the  theories  and 
remedies  of  the  past,  with  which  it  was  thought  advisable 
to  introduce  this  monograph.  Though  an  intensive  treat- 
ment of  the  subjects  considered  has  not  been  possible,  the 
matter  next  to  be  taken  up  may  perhaps  be  seen  with 
a  truer  perspective  because  of  this  introduction. 

^  Lloyd  George,  The  People's  Insurance,  contains  an  interesting  ac- 
count of  the  presentation  of  the  bill  to  Parliament  by  Mr.  George,  and 
the  arguments  in  favor  of  it. 

Beveridge,  Appendix  F,  pp.  307-361,  gives  the  regulations  and  sched- 
ules which  have  been  drawn  up  in  the  administration  of  the  measure. 

Sidney  and  Beatrice  Webb,  in  The  Prevention  of  Destitution  (Lon- 
don, 1912),  rather  harshly  criticise  the  original  Insurance  Bill.  Their 
general  discussion  of  insurance  as  a  measure  of  relief  is  illuminating 
(pp.  158-220.) 


CHAPTER  II 

Contemporary  English  Theories  of  Unemployment 
AND  OF  Unemployment  Relief 

Many  diverse  theories  have  in  the  past  been  advanced 
and  are  held  today  as  to  the  basic  causes  of  the  phe- 
nomenon of  unemployment.  Some  of  the  past  theories 
have  been  discarded  with  the  advance  of  economic 
knowledge.  On  the  contemporary  theories  varying  de- 
grees of  emphasis  are  placed  by  the  different  students  of 
the  problem.  Few  of  them  advance  one  exclusive  cause, 
but  few  agree  as  to  the  relative  importance  of  the  sev- 
eral outstanding  causes.  To  take  up  in  chronological 
order,  or  otherwise,  the  complete  scheme  of  each  writer 
would  involve  a  great  deal  of  repetition  and  a  consider- 
able degree  of  disorganization  in  the  presentation  of  the 
problem.  It  is  deemed  best,  therefore,  to  consider  sep- 
arately each  of  the  prominent  group  causes  into  which 
fall  the  many  theories  advanced. 

In  the  introductory  chapter  to  his  analysis  of  the 
problem  of  unemployment,^  W.  H.  Beveridge  emphasizes 
several  fundamental  considerations  which  are  equally 
pertinent  to  the  present  exposition.  The  evil  to  be 
studied,  he  says,  is  that  of  ''maladjustment  between  the 
supply  of  and  the  demand  for  labor."  ^  His  inquiry, 
therefore,  is  to  be  an  economic  one,  not  one  made  from 
the    standpoint    of    charitable    administration.       In    the 

^  Unemployment:  A  Problem  of  Industry  (London,  1912). 
"^ Ibid.,  p.  3. 

41]  41 


42  CONTEMPORARY  THEORIES  OF  UNEMPLOYMENT    [42 

second  place,  it  is  unemployment,  not  the  unemployed, 
which  must  be  studied,  for  ''  any  one  unemployed  indi- 
vidual may  represent  the  concurrence  of  many  different 
forces,  some  industrial,  some  personal/'  ^  These  two 
general  considerations  will  govern  the  present  approach 
to  the  problem. 

What  may  be  called  the  "  orthodox "  theories  as  to 
the  causes  of  unemployment  may  be  ranged  under  four 
main  heads,  to  accept  the  classification  set  up  by  Bev- 
eridge,  which  is  convenient  for  the  present  purpose. 
They  are:  the  loss  and  lack  of  industrial  quality;  indus- 
trial fluctuations;  the  reserve  of  labor;  and  the  personal 
factor.  Certain  theories  {g.  g,,  that  of  a  labor-surplus) 
do  not  fall  within  this  classification,  being  omitted  be- 
cause not  widely  held  today.  Reference  to  some  of  these 
outlying  theories  is  made  below.^ 

I.   LOSS  AND  LACK  OF  INDUSTRIAL  QUALITY 

The  ultimate  problem  of  unemployment,  as  has  been 
pointed  out,  is  that  of  lack  of  adjustment  between  the 
supply  of  labor  and  the  demand  for  labor.  The  present 
section  deals  with  types  of  "qualitative  maladjustment," 

^Beveridge,  op.  cit.,  p.  3. 

'  It  is  perhaps  unnecessary  to  state  that  in  the  present  consideration 
of  the  different  theories  nothing  but  their  broad  outlines  can  be  sketched. 
For  the  details  of  the  different  proposals,  and  for  the  technical  points 
concerning  the  administration  of  the  proposed  relief  measures,  reference 
may  be  made  to  the  authorities  quoted. 

Attention  should  also  be  called  to  the  fact  that  a  very  considerable 
re-alignment  of  the  theories  of  most  of  the  authorities  dealt  with  will 
be  necessary  in  order  to  bring  them  under  the  accepted  classifica- 
tion, inasmuch  as  the  methods  of  attacking  the  problem  and  of  classify- 
ing its  elements  vary  with  each  individual  writer. 

The  grouping  accepted  seems  to  be  the  best  available.  Its  use  will 
make  for  greater  clearness  and  simplicity  of  presentation  than  would 
otherwise  be  possible. 


43]  CONTEMPORARY  ENGLISH  THEORIES  43 

wherein  the  available  supply  of  labor  is  not  of  the  quality 
demanded  by  contemporary  industrial  needs.  This  mal- 
adaptation  may  be  due  to  one  of  three  causes. 

In  the  first  place  there  may  be  changes  in  the  char- 
acter of  the  demand  for  labor,  "changes  of  industrial 
structure,"  due  to  the  decay  of  particular  industries,  the 
introduction  of  new  processes  or  of  machinery,  or  to  a 
regional  shift  in  the  location  of  an  industry  or  a  group 
of  industries.'  Controversies  have  raged  since  the  days 
of  the  classicists  as  to  the  eiifect  of  such  industrial 
changes  on  the  condition  of  the  laboring  classes.  The 
view  held  jointly  by  Ricardo*  and  Marx  3  that  the  use  of 
machinery  tended  to  displace  labor  has  been  mentioned. 
The  general  conclusion  of  the  older  economists,  however, 
was  that  merely  temporary  distress  would  be  caused  by 
such  changes,  since  the  gross  demand  for  labor  would 
be  increased  by  increased  production.**  This  is  also  the 
general  consensus  of  opinion  among  modern  economists, 
though  the  relative  degree  of  importance  attached  to  it 
as  a  cause  of  unemployment  varies  widely.  There  is  no 
controverting  the  fact  that  a  new  process  may  render  a 
a  skilled  man's  technical  knowledge  useless,^  even  while 
tending  ultimately  to  increase  the  totial  produce  of  the 

^  Cf.  Beveridge,  pp.  111-13.  Cf.  also  J.  A.  Hobson,  The  Problem 
of  the  Unemployed  (London,  1896),  pp.  38-44. 

An  illuminating  description  of  "  Increasing  and  Decreasing  Trades," 
covering  the  period  from  1861  to  1891  is  given  by  Charles  Booth  in  his 
Life  and  Labor  of  the  People  in  London,  vol.  v,  second  series  (vol. 
ix  of  the  complete  works),  pp.  295-302. 

^  Supra,  pp.  17-18. 

'  Supra,  pp.  21-23. 

*•  Supra,  p.  23. 

'  C/.  N.  B.  Dearie,  Industrial  Training  (London,  1914),  p.  352. 
Cf.  also  Minority  Report  part  ii,  pp.  167,  189-90. 


44    CONTEMPORARY  THEORIES  OF  UNEMPLOYMENT    [44 

country,  and  hence  the  demand  for  labor.'  Beveridge  is 
among  those  who  contend  that  such  changes  are  of  Httle 
practical  importance  in  affecting  the  volume  of  unem- 
ployment,'' holding  that  these  industrial  reformations  act 
very  gradually  in  reducing  the  demand  for  any  particular 
type  of  labor.  The  majority  report,  emphatically  deny- 
ing a  contraction  in  the  gross  demand  for  labor,  yet 
urges  the  importance  of  the  "social  time-lag'^  as  a  cause 
of  local  and  temporary  unemployment.^  The  Webbs  in 
their  minority  report  class  these  changes  as  one  of  the 
important  "  frictions  of  industrial  life "  which  are  con- 
stantly turning  steady  men  out  of  permanent  situations, 
"  men  who  for  years  have  satisfied  the  demand  for  labor 
in  one  form  and  who  may  find  the  form  suddenly 
changed ;  their  niche  in  industry  broken  up ;  their  hard- 
won  skill  superfluous  in  a  new  world;  themselves  also 
superfluous  unless  they  will  and  can  learn  fresh  arts  and 
find  the  way  into  unfamiliar  occupations."  "^  A  similar 
argument  is  put  forward  by  Mr.  John  Richardson  in  his 
testimony  before  the  Poor  Law  Commission.^  He  holds 
that  modern  machine  methods  tend,  in  their  ultimate 
effects,  permanently  to  displace  labor,  as  well  as  to  re- 
duce the  general  level  of  skill  and  intelligence  among 
workers. 

'  Cf.  Great  Britain,  Report  of  Royal  Commission  on  the  Poor  Laws, 
Appendix,  vol.  ix.  pp.  202 — 3.  An  interrogation  of  Sidney  Webb  by- 
Professor  Smart  concerning  the  effects  of  machinery  and  changing 
industrial  processes  gives  rise  to  an  illuminating  exchange  of  opinions 
on  the  subject. 

'Beveridge,  pp.  113-17. 

'^Report  of  Royal  Commission  on  the  Poor  Laws,  part  vi,  ch.  1,  pp. 
437-45. 

*  Quoted,  Minority  Report,  part  ii,  p.  168.  Cf.  also  Prevention  of 
Destitution,  p.  95. 

'"Report  of  Royal  Commission  on  the  Poor  Laws,  appendix,  vol.  ix, 
pp.  252-3. 


45]  CONTEMPORARY  ENGLISH  THEORIES  45, 

A  view  midway  between  these  diverse  contentions  is 
held  by  Hobson.  The  factor  determining  whether  un- 
employment is  to  be  increased  or  diminished  by  the 
introduction  of  machinery  in  a  particular  trade  is  the 
"  elasticity  of  demand  "  for  the  product  of  that  trade. 
If  inelastic,  workers  will  be  displaced,  but  even  in  this 
case  there  need  be  no  net  reduction  of  employment,  since 
the  purchasing  power  released  by  the  fall  of  price  of  a 
commodity  will  be  turned  in  other  directions/ 

The  requirement  laid  upon  the  modern  working-man 
by  this  **  changeability  of  the  industrial  process  *'  is  that 
of  a  degree  of  mobility  and  adaptability  never  exacted 
from  his  predecessors.  On  this  point  all  agree,  whether 
tending  to  minimize  or  exaggerate  the  importance  of 
these  changes.* 

The  second  factor  tending  to  bring  about  a  loss  of 
industrial  quality  is  that  of  age.  The  worker  who  is 
growing  old,  who  is  losing  his  power  to  adapt  himself 
to  new  conditions  and  new  circumstances,  is  facing  an 
industrial  world  which  requires  a  constantly  greater  de- 
gree of  adaptability.  Extensive  inquiries  tend  to  prove 
that  men  are  not  turned  out  of  their  positions  on  account 
of  old  age  any  more  frequently  at  present  than  has  been 
the  case  in  the  past,^  but  that  getting  back  into  industry 
after  middle  age  has  been  reached  is  becoming  more 
difficult.  Rather  convincing  evidence  on  this  point  is 
given  by  Rowntree  and  Lasker  in  the  record  of  an  in- 

*J.  A.  Hobson,  The  Industrial  System  (London,  1909),  pp.  279- 
282.     Cf.  also,  Hobson,  Problem  of  the  Unemployed,  pp.  49-50. 

'On  this  subject  cf.  Geoffrey  Drage,  The  Unemployed  (London, 
1894),  pp.  127,  148-9;  Percy  Alden,  The  Unemployed  (London,  1905), 
pp.  34,  66.  Alden's  book  deals  almost  exclusively  with  proposed  rem- 
edies, taking  certain  causes  rather  for  granted. 

'^  Cf.  Beveridge,  pp.  117-24. 


46    CONTEMPORARY  THEORIES  OF  UNEMPLOYMENT    [46 

tensive  study  of  unemployment  in  the  town  of  York. 
For  practically  one-fourth  (23.3^)  of  the  regular  workers 
unemployed  at  the  time  of  their  survey,  age  was  the 
primary  factor  which  rendered  re-entry  into  industry 
difficult/  It  is  interesting  to  note  that  the  one  apparent 
exception  to  this  general  rule  was  found  in  the  building 
trades,  in  which  contractors  evidently  favored  men  above 
middle  age.""  A  considerable  difference  of  opinion  exists 
as  to  whether  the  length  of  industrial  life  is  increasing 
or  diminishing.  On  the  one  hand  it  is  held  that  the 
period  of  dependence  has  increased,  because,  with  a 
lengthening  actual  life  there  has  been  no  change  in  the 
length  of  the  working  life.^  This  is  controverted,  at 
least  in  its  absolute  form,  by  Beveridge,  who  shows  by 
means  of  superannuation  age  figures  that  in  certain  trades 
the  working  life  has  increased.'^  The  Webbs  specifically 
deny  that  age  is  of  increasing  importance  as  a  cause  of 
the  turning  of  men  out  of  industry,  holding,  however, 
that  age  makes  more  difficult  the  mobility  and  adapta- 
bility required  in  the  modern  world. ^ 

Third  of  the  causes  of  maladjustment  as  to  quality  be- 
tween the  supply  of  and  the  demand  for  labor  is  that  of 

^  Rowntree  and  Lasker,  Unemployment:  A  Social  Study  (London, 
191 1),  pp.  52-4. 

Ubid.,  p.  148. 

'C.J.  Hamilton,  "Unemployment  in  Relation  to  Age  and  Accident." 
In  :  Papers  and  Proceedings,  National  Conference  on  the  Prevention  of 
Destitution  (1911),  pp.  460-6. 

*  Unemployment,  pp.  122-3. 

^Minority  Report,  part  ii,  pp.  224-30. 

A.  C.  Pigou,  Unemployment  (N.  Y.,  1913),  places  age  among  the 
several  causes  conducing  to  maladjustment  between  wage  rates  and  de- 
mand, and  hence  to  unemployment.     Cf.  infra,  pp.  48-49. 

Cf.  also  Testimony  of  Mr.  John  Richardson  before  the  Poor  Law 
Com.,  appendix,  vol.  ix,  p.  253. 


47]  CONTEMPORARY  ENGLISH  THEORIES  47 

deficiency  of  industrial  training.  This  is  placed  by  some 
as  the  ranking  cause  for  the  existence  of  unemployment, 
or,  at  least,  as  one  of  the  most  insidious  and  demoraliz- 
ing of  the  several  causes.  "We  regard,"  says  the  Min- 
ority Report  of  the  Poor  Law  Commission^  "  this  pierpet- 
ual  recruitment  of  the  unemployable  by  tens  of  thousands 
of  boys,  who,  through  neglect  to  provide  them  with 
suitable  industrial  training,  may  almost  be  said  to  grad- 
uate into  unemployment  as  a  matter  of  course,  as  perhaps 
the  gravest  of  all  the  grave  facts  that  the  Commission 
has  laid  bare."  ^ 

The  theory,  in  its  broad  form,  is  as  follows  :  A  charac- 
teristic feature  of  modern  industry  is  the  employment  of 
juveniles  not  as  learners  but  as  wage-earners,''  in  occu- 
pations which  they  can  retain  only  up  to  maturity,  and 
which  fail  to  prepare  them  for  anything  other  than  the 
lowest  forms  of  unskilled  work.  These  "  blind  alley"  or 
*Mead  end"  occupations  are  the  breeding  grounds  for 
the  low-grade  casual  type  which  forms  the  chief  element 
in  the  underemployed  and  unemployable  classes.  That 
these  classes  are  so  recruited  is  clearly  shown  by  the 
startlingly  large  precentage  of  youths  applying  to  dis- 
tress committees.3  Not  only  has  lack  of  industrial  train- 
ing characterized  ** blind  alley"  employments,  but  also 
vicious  habituation  to  irregularity  and  often  to  im- 
morality.'^ 

'  Quoted,  Dearie,  p.  416. 

'  Ci.  supra,  p.  21-23,  note  on  Marx'  theories. 

^Minority  Report,  part  ii,  p.  220. 

*■  E.  g.  the  influence  of  the  messenger  service. 

Cf.  Dearie,  Industrial  Training,  pp.  360-452,  for  a  very  complete 
analysis  of  the  *'  blind  alley  "  and  its  relation  to  the  problem  of  unem- 
ployment. 

Cf.  also  Cyril  Jackson,  "Boy  Labor",  Royal  Commission  on  the 
Poor  Laws,  appendix,  vol.  xx. 


48    CONTEMPORARY  THEORIES  OF  UNEMPLOYMENT    [48 

The  opinion  of  the  subscribers  to  the  minority  report 
as  to  the  importance  of  this  subject  is  clear  from  the 
above  quotation.  Again  they  state,  "  The  mass  of  un- 
employment is  continually  being  recruited  by  a  stream 
of  young  men  from  industries  which  rely  upon  unskilled 
boy  labor  and  turn  it  adrift  at  manhood  without  any  gen- 
eral or  special  industrial  qualification  and — it  will  never 
be  diminished  until  this  stream  is  arrested." '  Beveridge, 
however,  while  recognizing  the  deleterious  effects  of 
this  system  of  juvenile  employment,  and  considering  it 
to  be  a  vital  factor  in  the  determination  of  the  incidence 
of  unemployment,  does  not  hold  it  be  of  extreme  impor- 
tance in  its  effects  upon  the  volume  of  unemployment."* 
It  does  help  to  determine  what  individuals  shall  be 
among  the  casuals  and  the  under-employed,  but  the  mere 
elimination  of  that  system  "  would  not  touch  the  causes 
of  industrial  fluctuation,  or,  in  practice,  prevent  casual 
employment."  3  The  reason,  according  to  Beveridge,  for 
the  existence  of  a  group  of  casual  laborers  is  not  the 
unfitness  of  certain  men  for  steady  work,  but  the  pre- 
sence of  a  demand  for  that  type  of  labor.  The  lack  of 
industrial  training  facilitates  but  does  not  cause  casual 
labor.* 

From  another  point  of  view  Professor  A,  C.  Pigou 
advances  a  theory  as  to  the  relation  of  this  "  blind  alley" 
training  to  unemployment.     His  general   contention  is 

^Minority  Report,  part  ii.,  p.  224. 

A  vivid  description  of  these  conditions  is  given  by  Sidney  Webb  in 
the  introduction  to  Juvenile  Labor  Exchanges  and  After  Care,  by 
A.  Greenwood  (London,  1911). 

'  Unemployment,  pp.  125-32. 

^ Ibid,,  p.  131. 

*  For  a  discussion  of  the  topic  of  the  relation  of  casual  employment 
to  unemployment  cf.  infra,  ch.  ii,  sec.  5. 


49]  CONTEMPORARY  ENGLISH  THEORIES  49 

that  "  unemployment  is  wholly  caused  by  maladjustment 
between  wage  rates  and  demand,"  his  main  thesis  being 
that  unemployment  is  due  to  an  excess  of  the  demanded 
wage  rate  above  the  competitive  level  which  would 
normally  be  established  where  a  given  number  of  people 
of  given  degrees  of  efficiency  are  competing  for  work 
under  a  system  of  casual  engagement/  Since  payment 
cannot  be  adjusted  to  efficiency  "  an  element  of  artifici- 
ality is  introduced  into  the  wage  rate  of  second-grade 
work-people."''  Especially  is  this  true  where,  because 
of  humanitarian  ideas,  a  legal  or  customary  minimum 
wage  above  the  normal  competitive  level  for  inefficient 
workers  is  established.  The  creation  of  inefficient  work- 
ers, therefore,  through  faulty  industrial  training,  is  a 
strong  factor  in  bringing  about  a  state  of  maladjustment 
between  wage  rates  being  paid  and  those  rates  normal 
to  the  number  and  relative  efficiency  of  the  workers. 
Pigou,  in  fact,  places  such  emphasis  on  this  factor  (to- 
gether with  that  of  personal  disability),  that  he  lays 
down  this  law :  "  The  determinant  upon  which  the  aver- 
age amount  of  unemployment  ^  depends  is  found  in  the 
number  of  work-people  of  the  lowest  grade,  so  ill- 
endowed  by  nature  and  education  as  to  be  incapable  of 
really  efficient  work,  that  exist  in  any  country,  as  com- 
pared with  its  general  wealth." '^ 

N.  B.  Dearie,  writing  with  the  experience  of  an  inten- 
sive survey  of  industrial  training  in  London,  presents 
the  problem  in  yet  another  light.     The  lack  of  industrial 

^A.  C.  Pigou,  Unemploymetit,  pp.  51-7. 

Ubid.,  p.  63. 

'Pigou  uses  the  term  unemployment  as  practically  equivalent  to  **  in- 
voluntary idleness,"  including  time  lost  by  persons  working  short  time 
as  well  as  by  those  doing  no  work;  Unemployment,  p.  242. 

*Ibid.y  pp.  66-7. 


50    CONTEMPORARY  THEORIES  OF  UNEMPLOYMENT    [50 

training,  according  to  his  analysis,  helps  to  determine 
the  amount  as  well  as  the  incidence  of  unemployment/ 
The  reason  for  this  effect  upon  the  amount  of  unemploy- 
ment is  found  in  the  possibility  of  '*  substitution  of 
methods  "  in  production.  Employers  adapt  their  meth- 
ods to  the  labor  supply,  doing  their  work  with  steady^ 
skilled  hands  if  they  are  available,  or  with  a  large  num- 
ber of  lower-grade  irregularly  employed  workers,  if  they 
are  to  be  obtained.  Net  profit  to  the  employer  is  often 
the  same,  whether  he  turn  out  high-class  goods  or  cheap 
low-grade  goods,  so  the  choice  of  method  is  in  a  sense 
immaterial  to  him,  depending  upon  the  available  labor 
supply.^*  That  labor  which  is  the  product  of  "  blind 
alley"  employment  is  peculiarly  suited  to  the  second 
type  of  production,  with  its  greater  amount  of  irregu- 
larity. There  results,  essentially  because  of  the  existence 
of  *'  blind  alleys,"  a  greater  amount  of  unemployment. 

A  discussion  of  the  reflex  influence  of  unemployment 
upon  industrial  training  is  an  important  contribution 
which  Dearie  makes.^  The  relation  of  the  supply  of  labor 
to  the  demand  for  it  will  determine  whether  the  methods 
of  production  and  of  training  are  to  be  wasteful  or  other- 
wise. If  there  be  a  '*  defective  demand"  {i.  ^.,  one 
considerably  short  of  the  total  labor  supply)  irregular 
methods  of  employment  and  bad  methods  of  training 
will  be  resorted  to.  That  such  a  defective  demand  has 
existed  in  England  for  years  is  proved,  in  Dearie's  eyes, 
by  the  excessive  waste  of  boy  labor,  and  by  the  unneces- 
sarily huge  reserves  of  labor  maintained  both  in  the 
skilled  and  unskilled  trades.  There  is  thus  a  vicious 
interaction  between  unemployment  and  faulty  industrial 
training,  each  tending  to  perpetuate  the  other. 

^Industrial  Training,  p.  418,  -Ibid.,  pp.  418-20. 

^Ibid.,  pp.  427-52. 


5 1  ]  CONTEMPORARY  ENGLISH  THEORIES  5 1 

The  majority  of  the  Poor  Law  Commission  hold  that 
"  the  growth  of  large  cities  has  brought  with  it  an  enor- 
mous increase  in  the  (juvenile)  occupations  that  are 
making  directly  for  unemployment  in  the  future."^  In 
very  comprehensive  papers  presented  to  that  Commission, 
Reginald  Bray""  and  Michael  E.  Sadler ^  put  forward 
similar  contentions,  the  former  epigramatically  stating 
that  "  No  use  at  five-and-twenty  is  of  more  validity  than 
too  old  at  forty." 

Of  the  unemployed  youths  interviewed  in  the  survey 
of  York,  the  great  majority  had  come  from  "blind  alley'' 
occupations.* 

The  most  detailed  study  extant  of  the  actual  occupa- 
tions entered  upon  by  boys  leaving  the  elementary 
schools,  with  regard  to  the  permanence  and  educative 
value  of  these  occupations,  was  made  by  Cyril  Jackson 
for  the  Royal  Commission  on  the  Poor  Laws.^  His 
survey  convinced  him  of  the  dififiiculty  boys  find  in  secur- 
ing permanent  work  of  a  satisfactory  character,  and  of 
the  degenerating  effect  of  the  work  they  do  get  not  only 
negatively  in  failing  to  train  them,  but  positively  in 
breaking  down  character  and  sense  of  responsibility.^ 

The  question  as  to  whether  the  lack  of  industrial  train- 
ing merely  causes  certain  individuals  rather  than  others 
to  be  unemployed,  or  does  actually  increase  the  aggre- 

*  Report  of  Royal  Commission  on  the  Poor  Laws,  vol.  i,  p.  418. 
"^ Ibid.,  appendix,  vol.  ix,  pp.  315-29. 

^ Ibid.,  appendix,  vol.  ix,  pp.  211-28. 

*  Rowntree  and  Lasker,  Unemployment,  p.  9. 

This  fact,  of  course,  neither  proves  nor  disproves  the  Beveridge  con- 
tention that  faulty  training  determines  the  incidence,  not  the  volume, 
of  unemployment. 

^Appendix,  vol.  xx. 

'^ Ibid.,  pp.  27-28. 


52    CONTEMPORARY  THEORIES  OF  UNEMPLOYMENT    [52 

gate  amount  of  unemployment,  is  perhaps  of  academic 
rather  than  of  practical  interest,  since  even  those  who 
hold  the  former  view  admit  that  the  evil  facilitates  casual 
employment,  and  should  be  eliminated. 

The  three  factors  dfscussed  in  the  present  section, 
though  technically  differing  in  character,  are  all  inter- 
related causes  for  qualitative  maladjustment  between  the 
supply  of  and  the  demand  for  labor.  Whether  maladap- 
tation  is  due  to  an  "  objective  change  in  the  methods  of 
production,"  a  "  subjective  change  brought  by  advancing 
years,"  or  to  original  deficiencies  in  industrial  training, 
there  is  the  same  ultimate  evil  to  be  dealt  with. 

2.    PROPOSED  REMEDIES  FOR  QUALITATIVE 
MALADJUSTMENTS 

The  inadvisability  of  attempting  in  any  way  to  inter- 
fere with  changes  in  industrial  processes,  because  of  their 
ultimate  beneficial  results,  is  admitted  by  practically  all 
the  authorities.  Dearie  does  not  sanction  the  methods 
of  production,  arising  from  a  defective  demand,  which 
depend  upon  cheap,  irregular  labor,  and  hence  would 
discourage  that  type  of  industrial  change.  However,  he 
sees  no  method  of  preventing  that  particular  evil  except 
through  an  increasing  demand  for  labor.'  The  conclu- 
sion, therefore,  in  regard  to  this  first  cause  is  that,  in- 
dustrial changes  being  unavoidable,  the  remedy  for 
resulting  distress  is  to  be  found  in  community  action  to 
further  mobility  and  adaptability  on  the  part  of  its  labor 
force. 

Beveridge  conceives  that  the  organization  of  the  labor 
market,  the  bringing  about  of  ^'organized  fluidity  of  labor  " 
through  a  national  system  of  labor  exchanges,  would  of 

^Industrial  Training,  p.  452. 


53]  CONTEMPORARY  ENGLISH  THEORIES  53 

itself  largely  settle  this  problem/  Guidance  to  new  oc- 
cupations, not  support,  is  requisite  for  men  who  have 
lost  their  established  means  of  livelihood.  The  Webbs 
go  somewhat  further  than  this.  The  necessary  adapta- 
bility, in  their  view,  must  be  given  by  the  state  to  those 
who  are  capable  of  resuming  their  places  in  industrial 
employment.  Free  training  establishments  with  a  strict 
curriculum  of  physical  and  industrial  training,  aiming  at 
the  '*  industrial  over-hauling "  of  each  individual  ad- 
mitted, are  earnestly  advocated.^  The  majority  of  the 
Poor  Law  Commission  also  propose  labor  exchanges 
for  assisting  the  mobility  of  labor,^  and  agricultural  and 
industrial  institutions  for  training  the  unemployed.'^ 

A  fact  which  is  becoming  of  increasing  importance  in 
connection  with  the  introduction  of  machinery,  tending 
to  lessen  the  resulting  displacement  of  labor,  is  that 
modern  machinery  largely  displaces  other  machinery. 
Less  and  less  does  it  replace  the  handicraft  arts,  as  it 
formerly  did.  So  narrow  has  the  field  of  handicraft  be- 
come that  future  machine  inventions  will  in  all  probability 
cause  but  a  small  fraction  of  the  distress  occasioned  by 
the  first  inventions.  From  the  tending  of  one  machine 
the  modern  operator  turns  to  the  tending  of  another  and 
more  efficient  machine.  As  a  factor  in  unemployment, 
therefore,  such  mere  mechanical  changes  appear  to  be 
becoming  of  minor  consequence. 

^  Unemployment,^^.  210-11  ;  cf.  infra,  ch.  ii,  sec.  6,  for  the  discussion 
of  labor  exchanges. 

^Minority  Report,  part  ii,  pp.  301-2.    . 

^Report  of  Royal  Com,,  on  the  Poor  Law,  vol.  i,  pp.  507-9. 

^ Ibid.,  p.  545.  The  general  proposals  concerned  with  unemployment 
insurance  and  assistance  during  periods  of  unemployment  are  relevant 
in  this  connection,  but  since  they  apply  to  all  unemployment,  whatever 
the  cause,  they  will  be  treated  separately.     Cf.  infra,  ch.  ii,  sees.  9,  10. 


54    CONTEMPORARY  THEORIES  OF  UNEMPLOYMENT    [54 

Unemployment  due  to  old  age  can  at  least  in  part  be 
prevented  through  a  labor-exchange  system,  which 
should  aim  to  place  older  men  in  positions  for  which 
they  are  peculiarly  fitted.'  The  aim  of  social  policy, 
Beveridge  asserts,  is  to  keep  age  secure ;  old  men  should 
therefore  be  given  a  marked  preference  in  the  filling  of 
positions.  Pigou,  who  sees  a  chief  cure  for  unemploy- 
ment in  the  adjustment  of  payment  to  efficiency,  urges  a 
lower  scale  for  older  men,  pointing  out  that  in  fact  sev- 
eral trade  unions  not  only  permit  but  enforce  this  lower 
rate.^ 

Old-age  pensions,  though  not  established  in  England 
with  any  direct  reference  to  the  problem  of  unemploy- 
ment, have  some  bearing  upon  this  question.  The  Old 
Age  Pensions  Act  of  1908  provided  that  all  persons  over 
seventy  years  of  age  whose  annual  income  did  not  ex- 
ceed thirty-one  pounds,  ten  shillings,  should  receive 
weekly  pensions  from  the  government.  The  amount  of 
the  pension  varies  from  five  shillings  to  one  shilling  per 
week,  according  to  the  means  of  the  pensioner.  Certain 
disqualifications  are  provided  for,  but  in  the  main  the 
provisions  of  the  Act  are  liberal.^ 

The  most  important  element  in  this  problem  of  con- 
forming the  quality  of  the  labor  supply  to  the  demand  is 
that  of  eliminating  the  evil  of  "blind  alley"  employment, 
of  ensuring  to  the  youthful  worker  a  training  which  shall 
fit  him  for  steady  occupation  later  in  life.*^     Here  again 

^Ct.  Beveridge,  p.  211.  ^Unemployment,  pp.  61-2. 

'The  text  of  the  Act  may  be  found  in  William  A.  Casson's  pamphlet, 
Old  Age  Pensions  Act  (London,  1908),  which  gives,  as  well,  the  regu- 
lations made  thereunder,  and  explanatory  annotations.  Old  Age  Pen- 
sions  and  the  Aged  Poor  by  Charles  Booth  (London,  1899),  is  still  of 
value  on  this  subject. 

*For  a  complete  discussion  of  existing  agencies  designed  to  accom- 
plish this  end,  and  the  presentation  of  a  careful  program  of  future  policy, 
cf.  Dearie,  Industrial  Training,  pp.  452-553. 


55]  CONTEMPORARY  ENGLISH  THEORIES  55 

we  must  avoid  a  digression  into  controversies  concern- 
ing technical  methods,  and  merely  outline  a  broad  pro- 
gram, indicating  one  or  two  points  of  difference  of 
opinion. 

There  are  two  main  phases  to  this  question  of  youth- 
ful misfits — the  organization  of  boy  labor,  and  the  reor- 
ganization of  general  education  and  industrial  training.' 
A  beginning  in  the  solution  of  the  problem  of  organizing 
the  boy  labor  market  has  been  made  in  the  establish- 
ment of  juvenile  labor  exchanges,  connected  with  the  na- 
tional labor-exchange  system  and  co-operating  with  the 
national  educational  authorities.''  The  building-up, 
however,  of  a  thorough  system  of  juvenile  advisory  com- 
mittees, of  voluntary  care  committees,  of  juvenile  trade 
boards,  and  of  the  various  agencies  by  which  children 
are  to  be  advised  and  directed  in  their  choice  of  occupa- 
tions, is,  to  a  great  extent,  still  to  be  consummated.^  On 
the  need  for  these  all  are  agreed.  Arthur  Greenwood, 
in  a  valuable  little  book,*  sums  up  the  possibilities  of  re- 
form in  the  juvenile  labor  market. 

In  regard  to  the  necessary  reorganization  of  general 
education,  the  majority  Report  sounds  the  keynote  of  a 
general  complaint.  That  "...  our  school  curriculum 
does  not  supply  the  right  class  of  instruction  and  train- 
ing for  industrial  purposes,"  that  "...  the  atmosphere 
of  our  school  life  is  (not)  altogether  congenial  to  a 
career  of  manual  labor,"  and  that  as  a  consequence 
'*  clerical  labor  is  a  glut  upon  the  market "  while  "  high 
class  artisans  are  at  times  obtained  with  difficulty"  are 

»  Cf.  Dearie,  p.  528. 

'  Cf.  supra,  p.  37. 

3  Cf,  Dearie,  pp.  544-49- 

*•  Juvenile  Labor  Exchanges  and  After  Care  (London,  1911). 


56    CONTEMPORARY  THEORIES  OF  UNEMPLOYMENT    [56 

some  of  the  strong  assertions  made.'  The  majority  lay 
down  no  direct  program  for  reform,  but  urge  the  Board 
of  Education  '*  thoroughly  to  reconsider  the  curriculum, 
the  aims,  and  the  ideals  of  elementary  education,"  en- 
dorsing in  part  the  recommendations  of  their  investiga- 
tor, Mr.  Cyril  Jackson.  A  school-leaving  age  of  15, 
with  attendance  until  16  of  boys  not  properly  employed, 
is  specifically  advocated,  while  a  tentative  recommenda- 
tion for  universal  military  service  is  made.""  Dearie,  in 
this  same  connection,  advises  the  development  of  manual 
training,  general  industrial  and  commercial  training  for 
the  older  boys,  and  15  as  the  school-leaving  age.^ 

The  question  as  to  the  methods  of  giving  the  technical 
industrial  training  required  is  a  bone  of  bitter  contro- 
versy betw^een  the  different  English  authorities.  Best 
results  are  looked  for  by  Dearie  with  a  system  of  reor- 
ganized and  supervised  workshop  apprenticeship,  com- 
pulsory continuation  schools  being  provided  for  boys 
under  18  not  satisfactorily  employed.  Certain  "blind 
alley"  trades  are  to  be  eliminated,  while  the  evil  results 
of  others  are  to  be  counteracted  by  supervision  and  con- 
nection with  continuation  schools.  To  accompany  these 
reforms,  the  prohibition  of  excessive  hours  of  labor  and 
the  restriction  of  night  work  by  juveniles  are  advocated.* 
The  contentions  of  Professor  Pigou  are  based  upon  his 
general  analysis  of  the  unemployment  situation.  He 
urges  the  discouragement  of  "blind  alley"  occupations 
and   the  provision   of   increased   facilities  for  education 

^  Report  of  Royal  Commission  on  the  Poor  Laws,  vol.  ii,  p.  231. 

^For  Mr.  Jackson's  conclusions  and  recommendations  fsee  appendix, 
vol.  XX,  to  the  Report  of  Royal  Commission  on  the  Poor  Laws,  pp. 
27-32. 

^Industrial  Training,  p.  550. 

^Ibid.,  p.  551. 


57] 


CONTEMPORARY  ENGLISH  THEORIES 


S7 


and  training  as  measures  which  will  tend  to  bring  the 
general  level  of  efficiency  up  to  that  which  is  worth  the 
customary  minimum  wage,  and  which  will  thus  tend  to 
eliminate  unemployment.'  Rowntree  and  Lasker,  with 
other  suggested  reforms,  advocate  the  creation  of  com- 
pulsory schools  giving  technical  and  physical  training  to 
unemployed  juveniles  up  to  the  age  of  19.  ^ 

A  contribution  of  great  value  to  the  study  of  the 
whole  problem  of  child-work  is  made  by  Miss  O.  J. 
Dunlap  and  Richard  B.  Denman  in  their  English  Ap- 
prenticeship  and  Child  Labor.^  Though  not  essentially 
an  analysis  of  child  labor  as  a  factor  in  unemployment, 
it  throws  a  flood  of  light  on  this  phase  of  the  subject, 
the  historical  study  of  the  apprenticeship  system  and 
the  changes  in  industrial  method  being  strikingly  illum- 
inating. Their  findings  in  the  latter  regard,  concerning 
industrial  changes,  lead  them  to  a  conclusion  directly 
opposed  to  that  of  Dearie  on  the  question  of  shop- 
apprenticeship.  **The  systematic  enforcement  of  ap- 
prenticeship," they  assert,  "would  be  impossible  under 
modern  industrial  conditions,"*  though  they  admit  its 
limited  applicability.  Moreover,  they  allege  that  there  is 
a  real  demand  today  for  a  great  deal  of  low-skilled  labor, 
so  that  the  plan  of  giving  all  boys  a  technical  training  is 
absurd.^  Every  youth,  however,  needs  protection  from 
the  evil  of  lack  of  educative  qualities,  and  should  be 
given  the  adaptability,  initiative  and  physical  well-being 
needed  in  any  work  he  will  do.  For  the  attainment  of 
this  general  training  and  for  the  improvement  of  juvenile 
working   conditions   four   general   proposals   are  made. 


^Pigou,  Unemployment y  p.  243. 
^London,  1912. 
^Ibid.,  pp.  330-1. 


^  Unemployment,  pp.  20-28. 
^Ibid.,  p.  327. 


58    CONTEMPORARY  THEORIES  OF  UNEMPLOYMENT    [58 

The  raising  of  school  age,  an  adolescent  part-time  sys- 
tem, with  compulsory  continuation  classes,  the  regula- 
tion of  youthful  employment  out  of  school  hours,  and 
the  creation  of  juvenile  advisory  committees  to  assist  in 
the  organization  of  the  juvenile  labor  market  are  recom- 
mended as  essential  to  the  elimination  of  the  evils  of  the 
present  system/ 

The  subscribers  to  the  Minority  Report  advance  the 
most  drastic  scheme  of  any  proposed.  For  the  full  un- 
derstanding of  the  plan  it  should  be  noted  that  they  have 
in  mind  not  only  the  good  of  the  juveniles  concerned 
but  the  necessity  of  finding  industrial  vacancies  for  the 
surplus  labor  resulting  from  the  carrying-out  of  a  pro- 
cess of  "decasualization."*  The  chief  points  in  the  rec- 
ommendation are  these :  ^ 

1.  No  boy  under  the  age  of  15  shall  be  employed  in 
any  occupation  whatsoever. 

2.  No  youth  under  the  age  of  18  shall  be  employed  for 
more  than  30  hours  a  week. 

3.  All  youths  between  the  ages  of  15  and  18  shall 
attend  a  compulsory  continuation  school  giving  physical 
and  industrial  training  30  hours  a  week. 

W.  H.  Beveridge  looks  upon  the  problem  of  improv- 
ing the  conditions  of  youthful  labor  as  identical  in  prin- 
ciple with  that  of  organizing  the  labor  market,  both  be- 
ing methods  of  adjusting  supply  to  demand.  That 
industrial  training  can  be  looked  upon  as  "  the  principle 

remedy  for  unemployment "  is  denied.'*     Technical  edu- 

• 

*  Cf.  English  Apprenticeship  and  Child  Labor,  pp.  309-50,  for  a  very 
comprehensive  treatment  of  the  modern  problem  of  juvenile  labor, 

'C/.  infra,  ch.  ii,  sec.  6. 

'C/.  Minority  Report,  part  ii,  pp.  268-75. 

*  Unemployment,  p.  212. 


59]  CONTEMPORARY  ENGLISH  THEORIES  59 

cation  is  endorsed  only  in  so  far  as  it  can  be  guided  by 
an  accurate  knowledge  of  industrial  conditions,  the  ideal 
of  teaching  a  trade  to  every  youthful  worker  being  con- 
demned.' The  best  contribution  the  educational  system 
can  make,  Beveridge  maintains,  is  the  encouragement  of 
adaptability,  not  the  teaching  of  any  particular  trade. 
Primarily  it  must  be  through  a  better  organization  of 
the  labor  market,  with  an  extension  of  labor-market  or- 
ganization into  the  schools,  that  this  type  of  maladjust- 
ment is  to  be  remedied. "^ 

3.   INDUSTRIAL  FLUCTUATIONS 

The  second  of  the  group-causes  for  unemployment  is 
industrial  fluctuations  resulting  in  a  changing  demand 
for  labor.  These  fluctuations  are  of  two  types — sea- 
sonal, in  which  the  complete  cycle  of  falling  and  in- 
creasing demand  is  completed  within  the  period  of  one 
year,  and  cyclical,  in  which  the  change  extends  over  a 
number  of  years.  It  is  a  characteristic  feature  of  the 
first  type  that  the  variations  in  activity  are  trade  varia- 
tions, usually  affecting  each  trade  or  group  of  trades  in 
a  peculiar  and  distinctive  manner  and  at  a  particular 
time.  The  cyclical  fluctuations  strike  practically  all 
trades  alike,  resulting  in  fairly  uniform  periods  of  activity 
and  depression. 

The  causes  of  seasonal  fluctuations  are  not  far  to  seek, 
nor  is  there  any  considerable  difference  of  opinion  con- 
cerning them.  The  root  cause  is,  !of  course,  climatic. 
That  is  the  sole  determinant  of  cultivating,  sowing  and 

*  Unemployment,  p.  214. 

^Ibid.,  pp.  211-15. 

Reference  to  the  necessity  of  reforming  conditions  of  juvenile  educa- 
tion and  labor  is  made  by  Charles  Booth  in  Life  and  Labor  of  the 
People  in  London,  vol.  v,  second  series  (vol.  ix  of  collected  works), 
pp.  295-302. 


6o    CONTEMPORARY  THEORIES  OF  UNEMPLOYMENT    [60 

harvesting  periods  in  the  agricultural  industries,  and  of 
all  the  activities  dependent  upon  these.  Similarly, 
weather  conditions  affect  directly  building  activities,  and 
indirectly  coal  mining  and  gas  manufacture,  through 
their  influence  on  demand.  A  directly  derived  cause  is 
the  "  periodicity  of  social  and  economic  activities."  ^ 
While  usually  these  are  immediately  dependent  upon 
climatic  changes,  there  is  a  large  number  of  cases  in 
which  mere  custom,  once  seasonal  periods  exist,  has 
maintained  them  after  the  original  climatic  necessity  had 
disappeared.  Thus  wool  sales  take  place  six  times  a 
year  in  the  British  Isles  on  dates  maintained  by  the  force 
of  custom  alone. ^  The  fluctuations  of  the  "  tyrannous  and 
exacting  demands  of  fashion  "  are  similarly  determined  to 
a  large  extent  by  custom  rather  than  by  meteorological 
necessity. 

The  widespread  effect  of  this  seasonality,  influencing 
during  the  course  of  a  single  year  the  volume  of  output  in 
practically  every  industry,  has  not  been  thoroughly  appre- 
ciated. Its  presence  even  in  trades  far  removed  from  direct 
connection  with  weather  conditions  is  due  to  the  close  in- 
terlocking of  the  elements  of  modern  industry,  irregularity 
in  one  trade  ramifying  with  varying  intensity  through  all 
those  connected  with  it.^ 

Certain  characteristics  of  seasonal  fluctuations  may  be 
briefly  referred  to.  Not  only  do  they  vary  in  time  between 
different  trades,  but  in  regularity  and  range.  Fluctuations 
in  industries  characterized  by  large-scale  production  are 
less  marked  than  in  those  in  which  small-scale  production 
prevails.*     With  the  widening  of  a  trade's  industrial  area, 

^  Webb,  Seasonal  Trades,  p.  34. 
'  Cf.  Beveridge,  p.  34. 
'  Cf.  Seasonal  Trades,  p.  37, 
'Ibid.,  p.  56. 


6i]  CONTEMPORARY  ENGLISH  THEORIES  6l 

both  as  regards  sources  of  supply  and  markets,  local  fluc- 
tuations tend  to  neutralize  each  other,  and  the  irregularity 
of  the  provincial  stage  tends  to  be  lessened/  Seasonal  irre- 
gularity, moreover,  is  not  so  marked  in  those  industries  in 
which  the  value  of  capital  appliances  is  great  ^  or  in  which 
the  necessary  labor  is  skilled  and  limited  in  supply.^  In  both 
these  cases  it  is  to  the  employer's  advantage  to  regularize 
his  work  throughout  the  year. 

The  relation  of  seasonal  fluctuations  to  unemployment 
need  not  be  extensively  dwelt  upon.  A  special  committee 
of  the  Charity  Organization  Society,  investigating  unskilled 
labor,  regarded  the  seasonal  supply  of  commodities  and  the 
seasonal  demand  for  commodities  as  two  of  the  four  chief 
causes  of  casual  employment  {i.  e.,  employment  for  an  hour 
or  a  day)  which  is  one  of  the  most  pernicious  factors  in 
present-day  unemployment.*  Seasonality,  with  all  other 
forms  of  irregularity  of  employment,  tends  to  build  up  in 
each  industry,  and  often  for  each  employer,  a  reserve  of 
labor  —  a  "  stagnant  pool  "  —  large  enough  to  satisfy  the 
total  demand  in  the  busiest  season,  and  hence  the  source  of 
unemployment  and  under-employment  during  the  rest  of 
the  year.^  That  the  existence  of  these  reserves  is  encour- 
aged by  employers  for  their  own  personal  advantage  is 
probably  true  in  many  cases.®  The  throwing  out  of  work 
of  skilled  men  by  seasonal  fluctuations  is  an  obvious  cause 
of  distress,  for  normally  men  of  this  type  are  not  in  a  posi- 
tion to  pick  up  casual  jobs  during  the  off-seasons.  Pro- 
posals for  relieving  the  unemployment  due  to  these  annual 

^  Cf.  Seasonal  Trades,  p.  55. 

^Ihid.,  pp.  57-8.  Cf.  also  Charity  Organization  Society,  Report  of 
Special  Committee  on  Unskilled  Labor  (London,  1908),  pp.  5-6. 

^Ibid.,  p.  6.  *'Ihid.,  p.  4. 

5  Cf.  infra,  pp.  84-88. 

^Cf.  Seasonal  Trades,  p.  60. 


62    CONTEMPORARY  THEORIES  OF  UNEMPLOYMENT    [62 

changes  in  the  activity  of  different  industries  are  dealt  with 
at  the  end  of  this  section/ 

Fluctuations  in  business  and  industrial  activity  have  char- 
acterized the  course  of  economic  history  since  the  beginning 
of  the  nineteenth  century.  In  the  wake  of  the  depressions 
accompanying  these  fluctuations  have  been  periods  of  wide- 
spread unemployment,  prevailing  in  all  trades  at  the  same 
time.  The  evil  effects  of  temporary  seasonal  depressions 
have  been  inconsiderable  as  compared  with  the  results  of 
three-  or  four-year  periods  of  idleness  or  part-time  employ- 
ment. The  causes  of  these  periodic  fluctuations  are  obscure 
and  intangible,  yet  deeply  founded  in  the  modern  industrial 
system.  That  they  are  obscure  is  best  proved  by  the  wide 
diversity  of  theories  that  trained  economists  have  advanced 
to  account  for  them.  Discrepant  opinions  still  persist. 
Merely  the  briefest  resume  of  a  few  of  the  most  important 
current  theories  of  business  cycles  can  be  here  included.^ 

John  A.  Hobson  gives  these  periodic  depressions  the  cen- 
tral position  in  his  analysis  of  the  unemployment  question. 
He  deprecates  the  tendency  to  "  fritter  away  the  unity  of 
a  great  subject"  by  a  study  of  detailed  facts,  which  leads 
to  a  failure  to  discern  the  true  single  cause  of  the  various 
phenomena.    Unemployment,  he  maintains,  is  but  an  aspect 

^Seasonal  Trades,  by  Webb  and  Freeman,  which  has  been  quoted 
above,  contains  comprehensive  descriptions  of  various  trades  in  which 
there  are  marked  seasonal  fluctuations.  The  introduction  by  Miss 
Poyntz  is  of  especial  value. 

Detailed  data  on  seasonal  irregularities  in  a  number  of  trades  are 
given  in  Charles  Booth's  Life  and  Labour  of  the  People  in  London, 
vols,  i,  ii,  iii,  iv,  second  series  (vols,  v,  vi,  vii,  viii  of  collected  works), 
passim. 

*  Cf.  W.  C.  Mitchell,  Business  Cycles  (in  University  of  California 
Memoirs,  vol.  3,  Berkeley,  1913),  pp.  5-20,  for  a  more  comprehensive 
summary  of  current  theories. 

In  order  to  round  out  the  discussion  of  causes  of  C5''clical  fluctuations 
certain  American  theories  will  be  advanced  at  this  point,  though  this 
section  is  otherwise  devoted  to  EngHsh  theories. 


63]  CONTEMPORARY  ENGLISH  THEORIES  63 

of  trade  depression,  and  "  under-consumption  is  the  direct 
economic  cause  of  the  industrial  malady."  ^  His  argu- 
ment, in  outline,  is  this:  There  is  a  right  proportion  be- 
tween saving  and  spending  in  the  income  of  an  industrial 
community  at  any  time,  the  right  proportion  being  that  at 
which  the  amount  saved  will  adequately  provide  for  the 
demand  for  final  commodities  on  the  part  of  the  population 
in  the  calculable  future,  maintaining  full  employment  for 
the  factors  of  production.  However,  "  the  existence  of  a 
surplus  income  not  earned  by  its  recipients  .  .  .  has  the 
effect  of  disturbing  the  economical  adjustment  between 
spending  and  saving,"  for  the  surplus  received  in  active 
times  by  the  small  well-to-do  class  must  perforce  be 
saved,  their  gross  income  being  greater  than  their  spending 
power.  This  "  over-saving  "  leads  to  large  investment  in 
the  means  of  production,  and  the  markets  become  con- 
gested with  goods  which  cannot  be  sold  at  a  profit,  con- 
sumption having  failed  to  keep  pace  with  the  power  of 
production.  Then  comes  a  fall  in  prices,  the  incomes  of 
the  wealthy  are  reduced  until  excessive  saving  is  stopped, 
and  the  glut  is  slowly  worked  off.  During  the  period  of 
depression  there  is  a  "  simultaneous  excess  of  all  the  factors 
of  production;  "  this  condition  is  the  true  problem  of  un- 
employment. "  Over-saving  is  the  proximate  cause  of  that 
condition;  the  existence  of  surplus  incomes  is  the  ultimate 
cause."  ^ 

The  cause  of  market  glutting  (beyond  the  possibility  of 
sale  at  a  profit)  is  laid  by  W.  H.  Beveridge  at  another  door. 
He  agrees  that  with  the  present  amount  and  distribution  of 
the  national  income  "  agencies  for  future  production  are 

^Problem  ofJheUneptployed  (London,  1896),  p.  viii. 

*  r^T  also  J.  A.  Hobson,  The  Industrial  System  (London,  1909),  pp. 
282-7.  The  most  recent  statement  of  Hobson's  theory  is  given  in  this 
work. 


64     CONTEMPORARY  THEORIES  OF  UNEMPLO YMENT     [64 

set  up  in  excess  of  present  requirements."  The  reason, 
however,  is  found  in  the  nature  of  competition.  The  at- 
tempt of  a  group  of  competing  producers  to  "  engross  as 
large  a  share  as  possible  of  the  market"  leads  sooner  or  later 
"  to  their  joint  production  overshooting  the  demand  and 
glutting  the  market."  ^  Result  the  usual  depression  and 
unemployment  until  the  accumulated  stocks  are  cleared. 

The  majority  of  the  Poor  Law  Commission,  while  rec- 
ognizing trade  cycles  as  an  important  factor  in  the  unem- 
ployment problem,  make  no  attempt  to  give  a  specific  solu- 
tion for  this  evil,  merely  pointing  out  that  with  the  modern 
system  of  industrial  organization,  each  individual  catering 
to  the  wants  of  others  whom  he  may  never  meet,  the  marvel 
is  that  supply  and  demand  balance  each  other  so  well  as 
[they  do,  not  that  there  are  occasional  maladjustments.* 

Professor  Pigou's  reasoning  on  the  subject  of  these  fluc- 
tuations and  their  relation  to  unemployment  is  novel.  The 
amount  of  the  "  aggregate  wage-fund  "  {i.  e.,  the  quantity 
of  resources  that  a  community  is  prepared  at  any  time  to 
devote  to  the  purchase,  at  a  given  wage,  of  labor)  ^  is  de- 
pendent upon  the  amount  of  the  real  income  of  the  com- 
munity and  the  degree  of  optimism  which  business  men 
entertain  as  to  the  prospects  of  investment.  Variations  in 
both  these  factors  (income  and  optimism)  come  about  as 
the  result  of  variations  in  the  bounty  of  nature.  In  the 
conclusion  that,  in  a  considerable  number  of  cases,  booms 
in  business  confidence  have  their  origin  in  good  harvests, 
Pigou  holds  that  "  deduction  and  induction  corroborate 
one  another."  *  He  further  contends  that  there  is  a  large 
element  of  truth  in  Jevons'  connection  of  cyclical  move- 

^  W.  H.  Beveridge,  Unemployment,  p.  59. 

^  Report  of  Royal  Com.  on  Poor  Laws,  pp.  423-4. 

3  Pigou,  Unemployment,  pp.  113-4. 

*Ibid.,  p.  115.  .  ' 


65]  CONTEMPORARY  ENGLISH  THEORIES  65 

ments  with  solar  changes.  An  additional  point  which  is 
of  importance  in  regard  to  the  relation  of  these  periodic 
depressions  to  unemployment  is  made  by  Pigou.  ''  Cy- 
clical movements  of  the  general  wage-fund  tend  to  react 
with  exceptional  force  upon  the  demand  for  labor  in  indus- 
tries engaged  in  the  production  of  instrumental  goods."  ^ 
This  is  true  for  two  reasons :  In  the  first  place  investments 
are  the  essential  point  of  fluctuation,  and  it  is  in  the  pro- 
duction of  these  instrumental  goods  that  investment  be- 
comes materialized.  Secondly,  variations  in  the  demand 
for  the  production  of  new  instrumental  goods  are  larger 
partly  because  of  the  existence  of  a  large  stock  of  them, 
relative  to  the  annual  output,  and  partly  from  the  fact  that 
a  period  of  boom  adds  to  the  stock  and  so  confronts  the 
ensuing  period  of  depression  with  an  enlarged  initial 
supply.^  His  conclusion  is  that  "A  nation  which  concen- 
trates upon  the  manufacture  of  the  instruments  of  industry 
courts,  thereby,  a  relatively  heavy  burden  of  unemploy- 
ment." " 

Of  other  explanations  there  have  been  many.  Thus, 
"  May  ascribes  crises  to  the  disproportion  between  the  in- 
crease in  wages  and  in  productivity,  Aftalion  to  the  dimin- 
ishing marginal  utility  of  an  increasing  supply  of  com- 
modities, Bouniatian  to  over-capitalization,  Spiethoff  to 
over-production  of  industrial  equipment  and  under-produc- 
tion of  compHmentary  goods,  Hull  to  high  costs  of  con- 
struction, Lescure  to  declining  prospects  of  profits,  Veblen 
to  a  discrepancy  between  anticipated  profits  and  current 
capitalization,  Sombart  to  the  unlike  rhythm  of  production 
in  the  organic  and  inorganic  realms.  Carver  to  the  dis- 
similar price   fluctuations   of   producers'    and    consumers' 

1  Pigou,  Unemployment,  p.  112. 

^Ihid.,  pp.  1 10-2.  *  Ibid.,  p.  112. 


66     CONTEMPORARY  THEORIES  OF  UNEMPLO YMENT     [66 

goods,  Fisher  to  the  slowness  with  which  interest  rates  are 
adjusted  to  changes  in  the  price  level."  ^  Because  of  the 
extreme  importance  of  this  subject  to  the  problem  under 
consideration  it  seems  advisable,  even  at  the  risk  of  cover- 
ing ground  that  has  been  well  trod,  to  summarize  the  ex- 
planation of  business  cycles  given  by  Professor  W.  C. 
Mitchell.  His  explanation  necessarily  lacks  the  simplicity  of 
the  foregoing  theories,  for  he  holds  that  such  fluctuations 
can  only  be  understood  when  viewed  as  the  result  of  the 
interaction  of  many  and  complex  factors.  The  cycle  may 
be  traced  through,  starting  at  any  one.  point : 

Recovering  from  a  period  of  depression  we  start  with  these 
conditions — a  low  price  level,  a  low  cost  of  doing  business, 
narrow  margins  of  profit,  liberal  bank  reserves,  a  conservative 
business  policy,  moderate  stocks  of  goods,  and  cautious  buying. 
Given  these  conditions,  with  accumulated  stocks  exhausted, 
population  growing,  timidity  slowly  being  forgotten,  and  the 
investment  demand  returning,  an  expansion  in  the  physical 
volume  of  trade  begins.  This  spreads  cumulatively  through- 
out the  industrial  world,  returning  to  give  new  impetus  where 
it  started.  A  rise  of  prices,  also  spreading  rapidly,  results, 
larger  profits  being  coined  by  producers  because  the  rise  in 
supplementary  costs  lags  behind  the  rise  in  selling  prices. 
Large  profits  and  business  optimism  lead  to  an  expansion  of 
investments,  and  the  physical  volume  of  business  is  further 
swelled. 

Stresses  within  the  system  of  business  begin  to  accumulate. 
The  costs  of  doing  business  gradually  increase;  capital  be- 
comes scarcer  and  interest  rates  rise;  the  negotiation  of  se- 
curities becomes  more  difficult.  Selling  prices  can  be  raised 
sufficiently  to  offset  these  stresses  in  most  industries.  But 
for  an  important  minority  prices  cannot  be  raised  or  capital 
cannot  be  secured  and  the  prospect  of  declining  profits  must 

1  Mitchell,  Business  Cycles,  p.  19. 


67]  CONTEMPORARY  ENGLISH  THEORIES  67 

be  faced.  Credit,  being  based  upon  the  capitalized  value  oi 
present  and  prospective  profits,  begins  to  waver;  investors 
become  wary  and  press  for  a  settlement  of  outstanding  ac- 
counts. 

With  the  liquidation  of  the  huge  credits  that  have  been  piled 
up,  a  crisis  develops.  Liquidating  debtors  put  pressure  upon 
their  own  debtors;  other  creditors  take  alarm.  This  liquida- 
tion and  the  resulting  contraction  may  be  accomplished  with- 
out a  violent  wrench,  or  may  be  characterized  by  a  financial 
panic  if  the  banking  organization  be  weak.  In  the  latter  case 
the  evils  of  the  crisis  are  intensified. 

There  follows  a  period  during  which  depression  spreads 
over  the  whole  field  of  business  and  grows  more  severe. 
Wage-earners  are  discharged,  family  incomes  fall,  consumers' 
demand  declines.  Business  demand  and  investment  are 
curtaileid.  Prices  fall,  discouragement  spreads,  enterprise  is 
checked.  For  two  or  three  years  industrial  depression  reigns 
and  i^  severe  condition  of  unemployment  exists.^ 

4.    PROPOSED  REMEDIES    FOR   UNEMPLOYMENT   RESULTING 
FROM    INDUSTRIAL    FLUCTUATIONS 

Of  the  remedies  proposed  for  unemployment  due  to 
seasonal  fluctuations,  the  discussion  of  two,  those  concerned 
with  unemployment  insurance  and  with  relief  for  men  dur- 
ing periods  of  unemployment,  will  be  deferred  until  the 
general  subject  of  causes  of  unemployment  is  concluded. 
Certain  others  which  apply  to  both  seasonal  and  cyclical 
fluctuations  will  be  considered  under  the  latter  head.^ 

The  outstanding  proposal  as  to  methods  of  dealing  with 
seasonal  fluctuations  exclusively  is  that  looking  toward  the 
organized  dovetailing  of  the  various  seasonal  occupations, 
so  as  to  give  the  workers  in  seasonal  trades  subsidiary  occu- 

^  W.  C.  Mitchell,  Business  Cycles,  pp.  571-9.    Most  of  the  foregoing 
summary  is  given  in  Professor  Mitchell's  own  words. 
2  Cf.  infra,  pp.  113-117. 


68     CONTEMPORARY  THEORIES  OF  UNEMPLO  YMENT     [68 

pations  for  the  off-seasons.  On  the  basis  of  studies  made 
by  the  Royal  Commission  on  the  Poor  Laws  and  by  some 
of  his  own  students,  Sidney  Webb  puts  forward  the  "  eco- 
nomic hypothesis  "  that  "  there  is  no  seasonal  slackness  in 
the  community  as  a  whole,"  ^  that  the  volume  of  employ- 
Iment  in  the  aggregate  is  practically  constant  throughout  the 
/year.  Since  weekly  or  monthly  we  are  all  consuming  the 
same  amount  in  the  aggregate,  it  follows  that  "  we  are 
setting  to  work,  in  the  aggregate,  the  same  amount  of 
labour."  ^  The  annual  distress,  therefore,  resulting  from 
alternations  of  employment  and  slackness  in  separate  trades, 
is  due  only  to  failures  in  adjustment,  since  the  "  seasons  " 
in  different  trades  completely  neutralize  each  other.  In- 
telligently organized  mobility,  secured  by  means  of  national 
labor  exchanges,  will  thus  be  able  to  eliminate  most  of  the 
distress  of  this  character  through  the  dovetailing  of  the 
different  seasonal  industries  into  each  other.^ 

This  contention  that  the  aggregate  demand  for  labor  is 
constant  throughout  the  year  is  specifically  denied  by  Pigou, 
who  asserts  that  ''  the  cold  weather  of  winter  is  predomi- 
nantly a  cause  of  contraction  in  the  demand  for  labor,  the 
area  over  which  it  cuts  down  demand  being  wider  than 
that  over  which  it  augments  demand."  *  Even  though  the 
winter  depressions  are  only  partly  oft'set,  however,  by  activ- 
ity in  other  trades,  Pigou  urges  the  efficacy  of  labor  ex- 

*  Seasonal  Trades,  p.  viii. 
^  Ibid.,  p.  ix. 

'  J.  A.  Hobson  in  his  latest  book  makes  the  same  statement — that 
"the  aggregate  employment  during  any  given  year  does  not  vary  much" 
(Work  and  Wealth,  N.  Y.,  1914,  p.  230).  Alternative  trades  for  work- 
ers in  irregular  employment  are  suggested  as  being  entirely  feasible. 
That  trades  which  are  necessarily  irregular  should  themselves  carry  the 
burden  of  the  "  labor  reserve "  needed  is  a  further  contention  of 
Hobson. 

*  Pigou,  Unemployment,  p.  109. 


eg]  CONTEMPORARY  ENGLISH  THEORIES  69 

changes  in  increasing  the  mobility  of  labor.  The  dove^ 
tailing  of  seasonal  occupations  so  as  to  provide  employment 
throughout  the  year  is  also  advocated  by  the  majority  of 
the  Poor  Law  Commission/ 

While  recognizing  that  this  process  of  "  deseasonaliza- 
tion  "  would  involve  the  displacement  of  a  large  part  of 
the  men  now  engaged  in  seasonal  occupations,  Beveridge 
favors  it,  though  uncertain  as  to  the  extent  to  which  sea- 
sonal correlation  can  be  carried.^  The  root,  however,  of 
the  seasonal  fluctuation  problem,  as  Beveridge  sees  it,  is 
under-employment,  the  living  from  hand  to  mouth  even 
during  the  busy  months.  The  worker  regularly  employed 
most  of  the  year  can  provide  in  advance,  either  through 
direct  saving  or  through  trade-union  benefits,  for  the  slack 
season,  but  the  under-employed  casual  has  no  opportunity 
to  do  this.  On  him  falls  the  chief  burden  of  seasonality. 
It  is  as  a  question  of  wages,  therefore,  that  seasonal  un- 
employment must  be  considered.  The  problem  of  casual 
employment  lies  at  the  heart  of  that  of  seasonal  employ- 
ment. With  the  remedying  of  the  demoralizing  conditions 
of  casual  employment  will  come  an  increase  in  the  intelli- 
gence and  foresight  of  the  workers,  which  will  result  in 
their  making  adequate  provision  for  foreseen  periods  of 
seasonal  unemployment." 

A  comprehensive  discussion  of  the  possible  methods  of 
obviating  seasonality,  or  at  least  its  most  evil  conse- 
quences is  contained  in  the  paper  by  Miss  Pbyntz  in 
Seasonal  Trades.^  The  tendency  of  widening  markets, 
large-scale  production,  the  introduction  of  machinery, 
with    the    resulting    increase    in    over-head    expenses,    to 

^  Royal  Commission  on  the  Poor  Law,  vol.  i,  p.  517. 

^  Beveridge,  Unemployment,  p.  210. 

3  Cf.  infra,  pp.  go,  91,  for  Beveridge's  decasualization  proposals. 

*  Pp.  55-69. 


^O     CONTEMPORARY  THEORIES  OF  UNEMPLOYMENT     [70 

diminish  seasonality  has  been  mentioned/  The  fact  that 
adaptabihty  on  the  part  of  the  laboring  force,  as  well  as 
mobility,  is  needed  for  the  success  of  dove-tailing  opera- 
tions is  emphasized ;  industrial  training  for  the  furtherance 
of  such  adaptability  is  urged. ^ 

Seme  of  the  most  important  of  the  proposals  for  en- 
abling workers  to  meet  seasonal  depressions  without  the  ill 
effects  that  characterize  such  phenomena  at  present  are 
concerned  as  well  with  cyclical  fluctuations.  The  various 
recommendations  having  to  do  with  the  unemployment  that 
is  a  feature  of  one  period  of  the  business  cycle  are  of  two 
types,  preventive  and  palliative.  The  preventive  measures 
are  those  designed  to  do  away  with  the  cycle  itself;  the 
palliative  measures  are  those  proposed  to  relieve  the  accom- 
panying distress.  The  former  type  will  be  briefly  dealt  with 
first. 

Periodical  depressions  of  industry  have  been  and  by  many 
still  are  looked  upon  as  inevitable — as  the  "  shadow  side  of 
progress  itself."  This,  on  the  whole,  is  the  view  of  Bev- 
eridge,  who  holds  that  "  they  probably  cannot  be  eliminated 
without  an  entire  reconstruction  of  the  industrial  order/'  ^ 
Many  others  of  those  writing  on  the  subject  of  unemploy- 
ment accept  cyclical  fluctuations,  if  not  as  inevitable,  at 
least  as  outside  the  scope  of  their  subject,  insofar  as  other 
than  merely  palliative  measures  are  concerned.*  There  are 
those,  however,  who  look  upon  these  cyclical  movements  as 
preventable. 

Pigou  puts  forward  several  proposals  for  lessening  the 
magnitude  of   these  fluctuations.      His  program  includes 

1  Cf.  supra,  pp.  60,  61. 

'  Material  too  detailed  for  inclusion  here  is  contained  in  some  of  the 
other  valuable  papers  in  Seasonal  Trades. 
'  Beveridge,  Unemployment,  p.  67. 
*  Cf.  Report  of  Royal  Commission  on  the  Poor  Laws,  p.  427. 


71  ]  CONTEMPORARY  ENGLISH  THEORIES  yi 

three  measures :  The  bond  of  credit,  which  is  the  material 
basis  for  the  close  interdependence  of  the  various  elements 
in  the  industrial  community,  should  be  weakened,  for  this 
interdependence  is  the  cause  of  the  widespread  character 
of  the  distress  resulting  from  depressions.  An  increased 
amount  of  cash  business  and  a  reduction  in  the  average 
lengths  of  credits  are  suggested  as  methods  of  accomplish- 
ing this  end.  Secondly,  an  enlightened  banking  policy 
conducing  to  the  same  end  is  urged.  His  third  remedial  pro- 
posal aims  at  reducing  the  stimulus  to  business  booms  by 
denying  to  business  men  the  "  excess  of  prosperity  "  which 
they  reap  because  of  the  reduced  real  interest  paid  on  loans 
during  a  period  of  rising  prices.  Fisher's  plan  of  "  stabil- 
izing the  dollar  "  by  making  the  standard  coin  virtually  a 
token  coin,  while  increasing  or  diminishing  the  mint  price 
of  bullion  in  accordance  with  variations  in  the  index  num- 
ber of  general  prices,  is  advocated  by  Pigou  as  a  means  of 
preventing  the  stimulus  to  expansion  given  by  these  excess 
profits.  He  asserts  that  the  lessening  in  the  average  volume 
of  unemployment  which  would  result  from  this  change 
would  compensate  for  the  extra  expense  involved.^ 

The  remedy  which  J.  A.  Hobson  proposes  for  unem- 
ployment is  derived  directly  from  his  analysis  of  cyclical 
fluctuations.  Surplus  incomes — over-saving — under-con- 
sumption —  this  is  the  causal  chain  leading  to  unemploy 
ment.  Hence,  the  only  effective  remedy  for  unemployment 
must  be  one  which  will  strike  at  these  causes  and  **  correct 
the  normal  tendency  of  production  to  outrun  consump- 
tion.'' ^  The  ownership  of  increased  consuming  power  is 
the  vital  point  upon  which  the  remedy  must  turn,  and  it 
must  aim  at  a  system  under  which  "  the  power  to  consume 
shall  be  accompanied  by  the  desire  to  consume."  *      The 

*  C/.  Pigou,  Unemployment,  pp.  1 16-128. 

'  The  Industrial  System,  p.  296.    '  Problem  of  the  Unemployed,  p.  99. 


72     CONTEMPORARY  THEORIES  OF  UNEMPLO YMENT     [72 

measures  which  are  to  accompHsh  this  are  of  four  types. 
The  taxation  of  unearned  incomes,  the  money  so  secured 
to  be  dispensed  in  raising  the  standard  of  pubhc  Hfe,  thus 
increasing  consumption  and  discouraging  over-saving,  is  the 
major  remedy  proposed.  Rehef  works  for  the  unemployed 
are  advisable  solely  because  they  involve  increased  consump- 
tion and  lowered  production.  The  raising  of  wages  is  a 
second  method  by  which  the  surplus  income  can  be  reduced 
and  consumption  increased.  The  general  shortening  of 
hours  will  have  a  like  effect.  Finally,  the  removal  from  the 
labor  market  of  superabundant  laborers — juvenile  workers, 
inefficients  and  weaklings — will  tend  to  reduce  the  ''  over- 
supply  of  current  productive  power."  ^ 

None  of  the  other  English  writers  on  unemployment 
have  attempted  to  advance  programs  for  preventing  these 
cyclical  fluctuations.  Mitchell  enumerates  several  modern 
agencies  which  are  giving  us,  by  degrees,  slightly  greater 
control  over  "  the  complicated  machinery  of  the  money 
economy."  "  Public  regulation  of  the  prospectuses  of  new 
companies,  legislation  .  .  .  against  fraudulent  promotion,, 
more  rigid  requirements  on  the  part  of  stock  exchanges 
regarding  the  securities  admitted  to  official  lists,  more  effi- 
cient agencies  for  giving  investors  information,  and  a  more 
conservative  policy  on  the  part  of  the  banks  toward  specu- 
lative booms,"  together  with  the  tendency  toward  "  inte- 
gration of  industry,"  are  some  of  the  factors  making  for 
the  reduction  of  the  magnitude  of  these  fluctuations,  and 
hence  of  value  as  preventives  of  unemployment.^ 

There  remain  to  be  considered  the  palliative  remedies, 

^  The  Industrial  System,  p.  298.  Certain  references  in  Work  and 
Wealth  (1914)  to  "the  necessary  elasticity  of  economic  life,"  "a  cer- 
tain amount  of  unavoidable  unemployment,"  etc.,  seem. to  show  that 
Hobson  does  not  look  upon  the  complete  elimination  of  unemployment 
as  possible.    Cf.  pp.  229-30. 

'  Cf.  Business  Cycles,  pp.  585-6. 


73]  CONTEMPORARY  ENGLISH  THEORIES  73 

those  designed  to  mitigate  the  evil  effects  of  industrial  de- 
pressions/ Chief  of  these  is  the  proposal  so  to  manipulate 
production  as  to  lessen  the  fluctuations  in  the  demand  for 
labor  that  accompany  business  cycles.  This  manipulation 
may  be  voluntary  on  the  part  of  private  producers,  may  be 
governmentally  induced  by  means  of  bounties  or  taxes,  or 
may  be  accomplished  by  means  of  the  distribution  of  public 
(state  or  municipal)  consumption.  There  are  thus  two 
types,  manipulation  from  the  side  of  production  and 
manipulation  from  the  side  of  consumption.^ 

The  possibility  of  varying  the  volume  of  production  de- 
pends upon  the  character  of  the  good  produced.  If  it  be  a 
perishable  good,  variation  of  production  so  as  to  offset 
fluctuations  is,  of  course,  impossible.  For  if  the  amount 
of  labor  engaged  in  the  production  of  this  good  in  certain 
districts  be  increased  during  periods  of  depression,  the  in- 
creased production  will  cause  a  lowering  of  prices,  and 
production  must  fall  off  in  some  other  districts.*  A  de- 
crease of  production  in  good  times  will  have  a  correspond- 
ing effect,  so  the  desired  balancing  of  fluctuations  cannot 
be  achieved  in  this  way.  The  situation  is  different,  how- 
ever, where  the  good  produced  is  a  durable  one,  and  storing 
is  possible.  In  the  production  of  staple,  standardized  arti- 
cles, which  are  not  costly  to  store  nor  subject  to  changes 
of  fashion,  the  demoralizing  effects  of  a  fluctuating  labor 
demand  can  be  largely  prevented  through  manufacture  for 
stock.  Pigou  contends  that  the  number  of^  commodities 
which  can  be  made  for  stock,  either  through  increased 
standardization  or  increased  storage  facilities  {e.  g.,  by  re- 
frigeration) is  constantly  increasing,  with  important  result- 

^  As  was  mentioned  above,  certain  of  the  remedies  to  be  here  enu- 
merated apply  to  seasonal  as  well  as  cyclical  fluctuations. 
*  Cf.  Pigou,  p.  175.  ^  Ibid.,  p.  176. 


74     CONTEMPORARY  THEORIES  OF  UNEMPLO  YMENT     [74 

ing  possibilities  for  the  diminution  of  unemployment.^  It 
was  noted  above  ^  that  making  for  stock  is  already  widely 
practised  by  those  firms  whose  overhead  expenses,  because 
of  expensive  machinery,  etc.,  are  large,  or  which  employ 
skilled  labor  which  cannot  be  easily  secured.^  This  meas- 
ure, obviously,  can  be  applied  either  to  seasonal  or  to  cycli- 
cal depressions. 

There  is  one  further  suggested  method  of  manipulating 
production  —  governmental  creation  of  new  industries  to 
act  "  as  reservoirs  of  labor,  as  sources  of  an  elastic  demand 
able  to  expand  and  contract  simultaneously  as  the  demand 
in  the  rest  of  the  labor  market  contracts  and  expands."  * 
Attention  should  be  called  in  advance  to  the  fact  that  it  is 
not  the  mere  creation  of  new  industries  as  such  that  is 
urged  by  those  who  suggest  this  method  of  relieving  unem- 
ployment. Though  proposals  for  the  solution  of  the  prob- 
lem of  unemployment  through  the  opening  of  new  sources 
of  demand  have  been  made  at  various  times  in  the  past, 
such  views  are  virtually  discarded  today.  Fluctuations  and 
disorganization  cannot  be  prevented  by  an  increase  in  the 
number  of  ordinary  industries  "  whose  activity  at  any 
given  moment  is  determined  by  the  current  demand  for  the 
goods  produced."  ^ 

The  most  definite  proposal  for  the  taking  up,  by  the 
creation  of  governmental  work,  of  the  slack  labor  resulting 
from  seasonal  and  cyclical  fluctuations  is  made  by  Rown- 
tree  and  Lasker.^     Their  contention  is  that  "  any  industry 

*  Pigou,  Unemployment,  pp.  100-3. 
2  P.  61. 

'  Cf.  Seasonal  Trades,  pp.  57-9. 
*■  B^veridge,  p.  194. 

*  Rowntree  and  Lasker,  Unemployment,  p.  72-    Cf.  also  Beveridge, 
pp.  193-4. 

*  Unemployment,  pp.  73-9,  306-8. 


75]  CONTEMPORARY  ENGLISH  THEORIES  75 

in  which  the  number  of  persons  engaged  can  be  modified 
without  regard  to  the  immediate  state  of  trade  "  can  be 
used  as  a  means  of  maintaining  a  fair  degree  of  equiHbrium 
between  the  supply  of  and  the  demand  for  labor.  In  for- 
estry, especially,  they  believe  they  have  such  an  industry, 
and  it  is  with  it  that  their  suggestion  is  chiefly  concerned. 
From  the  Report  of  the  Royal  Commission  on  Afforesta- 
tion they  quote  the  statement  that  there  are  in  Great  Britain 
eight  and  one-half  million  acres  suitable  for  afforestation. 
They  estimate  that  during  the  period  of  planting  500,000 
men  could  be  employed  at  this  work  for  four  months  each 
year,  the  number  and  length  of  time  worked  varying  with 
the  general  state  of  trade.  After  the  maturing  of  the  trees 
(from  40  to  80  years  after  planting)  21,250  men  would 
be  employed  permanently  and  191,250  for  four  months 
each  year.  About  nine-tenths  of  the  employees  would  be 
temporary  workers,  a  proportion  similar  to  that  prevailing 
in  Belgium  where  a  like  scheme  is  at  present  in  operation. 
The  ftmdamental  principles  the  authors  lay  down  for  all 
such  work  are  that  it  should  be  needed,  and  that  it  should 
be  conducted  on  business  principles,  not  as  relief  work. 
Though  such  measures  would  only  provide  work  for  a  cer- 
tain class  of  laborers  it  is  contended  that  their  temporary 
absorption  would  immediately  improve  the  prospects  of 
those  who  were  left. 

The  minority  of  the  Royal  Commission  on  the  Poor 
Laws  endorse  a  similar  proposal  for  the  carrying  on  of 
afforestation  and  land  reclamation,  though  they  advance 
the  plan  as  one  primarily  for  meeting  cyclical  depressions. 
The  same  warning  against  making  these  works  relief  works 
is  sounded.  The  enterprises  should  be  valuable  in  them- 
selves, men  suited  to  the  work  should  be  employed,  and 
normal  wages  should  be  paid.  The  number  employed  each 
year  should  be  based  upon  reports  from  the  national  labor 


76     CONTEMPORARY  THEORIES  OF  UNEMPLOYMENT     [76 

exchange  as  to  conditions  in  the  labor  market.  As  an  addi- 
tional argument  in  favor  of  the  scheme  it  is  asserted  that 
the  work  will  actually  be  done  cheaper,  due  to  the  fact  that 
capital,  which  is  unemployed  just  as  labor  is  during  periods 
of  depression,  can  be  secured  at  lower  rates. ^ 

Beveridge  takes  emphatic  exception  to  this  proposal  for 
governmental  creation  of  new  industries.^  He  advances 
three  arguments  against  it :  Such  works,  he  contends,  would 
inevitably  become  relief  works,  where  inefficient  men  were 
paid  more  than  they  were  worth.^  If  an  attempt  were 
made  to  avoid  this  by  hiring  only  men  skilled  in  the  work 
to  be  done,  only  a  certain  few  trades  would  be  benefitted, 
the  general  labor  market  being  unaffected.  Secondly,  such 
industries  could  not  act  as  reservoirs  for  the  labor  market 
unless  employment  in  them  were  made  less  attractive  than 
ordinary  employment  —  that  is,  men  would  not  flow  out 
again  when  industrial  conditions  became  better.  (The  very 
obvious  expedient  of  discharge  from  state  employment 
when  general  conditions  bettered  evidently  did  not  occur  to 
Beveridge.)  His  third  objection  is  the  most  important  and 
the  one  with  the  greatest  validity.  "  To  set  up  a  reservoir 
of  labor  at  the  public  cost,"  he  says,  "  is  simply  to  per- 
petuate industrial  disorganization."  *  The  methods  con- 
ducing to  casual  employment  and  demoralizing  periods  of 
idleness  would  be  supported  by  affording  a  refuge  to  men 
during  the  periods  of  idleness.  "  The  economic  causes  of 
unemployment  are  left  untouched  "  by  such  measures.     It 

*  Minority  Report,  part  ii,  pp.  284-6. 

'  Beveridge,  Unemployment,  pp.  193-7. 

'  Valuable  data  concerning  such  works  in  the  past  are  contained  in 
the  report  by  Cyril  Jackson  and  J.  C  Pringle  on  "  The  Effects  of  Em- 
ployment or  Assistance  given  to  the  Unemployed  since  1886  as  a  means 
of  Relieving  Distress  outside  the  Poor.  Law,"  Report  of  Royal  Com- 
mission on  the  Poor  Laws,  appendix,  vol.  xix. 

*  Beveridge,  Unemployment,  p.  196. 


77]  CONTEMPORARY  ENGLISH  THEORIES  yy 

is  upon  the  disorganized  condition  of  the  labor  market  that 
Beveridge  beHeves  the  first  attack  must  be  made/ 

Manipulation  from  the  side  of  consumption  is  practically 
confined  to  manipulation  of  the  demands  of  public  author- 
ities, national  and  municipal,  though  the  similar  distribu- 
tion of  railroad  orders  has  been  suggested.  It  may  take 
the  form  of  manipulation  designed  to  regularize  the  public 
demand  for  a  commodity  or  a  service,  manipulation  de- 
signed deliberately  to  "  casualize "  public  work  which 
would  normally  be  regular,  so  as  to  offset  fluctuations  in 
private  work,  or  manipulation  of  normally  irregular  de- 
mands so  as  to  accomplish  the  same  end.  Authorities  are 
divided  as  to  the  advisability  of  each  of  these  various  types 
of  governmental  distribution  of  demands. 

The  radical  policy  of  "deliberately  introducing  into  the 
demands  of  public  authorities  fluctuations  complementary 
to  those  occurring  in  private  industry  "  is  strongly  advo- 
cated by  the  minority  of  the  Poor  Law  Commission.* 
Proceeding  from  an  estimate  made  by  A.  L.  Bowley,  they 
assert  that  if  three  or  four  per  cent  of  the  government 
orders  were  held  back  each  year  and  concentrated  on  the 
slack  years  of  industrial  depression,  unemployment  due  to 
cyclical  fluctuations  could  be  largely  eliminated.  In  place 
of  the  policy  of  the  past,  in  which  no  heed  was  paid  by  the 
government  to  the  state  of  the  labor  market  in  letting  its 
contracts,  they  urge  the  "  earmarking  "  of  about  four  mil- 
lion pounds  a  year  of  the  money  annually  expended  on 
works  and  services,  to  be  set  aside  and  spent  during  the 
lean  years  in  private  industry.  The  ultimate  expenditure 
of  the  money  —  on  government  printing,  buildings,  battle- 

*  The  reason  for  this  stand  by  Mr.  Beveridge  will  appear  when  his 
analysis  of  labor  reserves  is  considered.    Cf.  infra,  pp.  90,  91. 

'  Minority  Report,  part  ii,  pp.  280-4.  Cf.  also  Prevention  of  Destitu- 
tion, pp.  112-24;  Mitchell,  Business  Cycles,  pp.  586-7. 


78     CONTEMPORARY  THEORIES  OF  UNEMPLOYMENT     [78 

ships,  telegraph  and  telephones,  etc. — would  be  the  same, 
but  a  consistently  administered  ten-year  program  would  re- 
place the  present  haphazard  distribution  of  the  national 
income.  Though  the  minority  admit  that  only  the  workers 
in  certain  industries  would  be  directly  helped,  they  contend 
that  there  would  be  given  an  automatic  impetus  to  contin- 
uity of  employment  in  all  trades  through  the  prevention  of 
discontinuity  in  certain  of  the  central  trades.  Here  would 
be  secured  the  "  approximate  uniformity,  one  year  with 
another,  in  the  aggregate  demand  for  labor  in  the  com- 
munity as  a  whole,"  ^  without  which  unemployment  on  a 
large  scale  cannot  be  prevented. 

The  majority  of  the  Poor  Law  Commission  take  another 
view  of  .the  possibilities  in  this  direction.  The  deliberate 
casualization  of  public  work,  the  deliberate  introduction  of 
irregularities  for  the  benefit  of  the  intermittent  laborer,  is 
regarded  as  "  pernicious."  ^  Only  insofar  as  public  work  is 
normally  irregular  is  it  advisable,  according  to  the  major- 
ity, to  attempt  to  counterbalance  fluctuations  in  private  in- 
dustry by  means  of  the  distribution  of  public  demands.' 
They  do  agree,  however,  that  that  part  of  the  public  de- 
mand for  labor  which  normally  fluctuates  should  be  made 
to  "  vary  inversely  with  the  demand  in  the  open  market." 

A  very  careful  analysis  of  the  various  possible  methods 
of  manipulating  governmental  demands  is  made  by  Pigou.* 
The  first  type  of  such  manipulation  mentioned  above,  that 
designed  to  regularize  a  public  demand  which  is  normally 
almost  continuous  in  character,  is  unreservedly  endorsed  as 
a  preventive  of  unemployment.  The  concentration  of  nor- 
mally irregular  demands  upon  the  slack  years  is  also  advo- 
cated.    To  the  minority  plan  for  complementing  private 

*  Prevention  of  Destitution,  p.  114. 

'  Cf.  Report  of  Poor  Law  Commission,  part  vi,  ch.  4,  vol.  i,  pp.  524-5. 

'  Pigou,  Unemployment,  pp.  178-86. 


79]  CONTEMPORARY  ENGLISH  THEORIES  79 

fluctuations  by  the  distribution  of  the  public  demands  he 
gives  a  quahfied  approval.  If  there  be  a  high  degree  of 
mobility  in  the  labor  force  of  a  country,  the  "  introduction 
of  compensatory  fluctuations  "  is  advisable.  However,  if 
labor  be  immobile,  if  its  movement  between  the  centers  of 
public  demand  and  those  of  private  demand  be  impeded, 
the  introduction  of  fluctuations  in  public  work  will  merely 
result  in  establishing  other  casual  occupations,  each  the 
center  of  a  separate  labor  reserve.  The  better  developed 
the  system  of  national  labor  exchanges,  therefore,  the  more 
successful  would  be  such  plans  as  that  of  the  minority. 
Pigou's  reasoning  on  this  point  appears  conclusive. 

Another  suggestion  for  preventing,  or  at  least  lessening, 
the  extent  of  the  unemployment  due  to  industrial  fluctua- 
tions is  that  for  promoting  the  elasticity  of  wage  rates. 
Pigou  best  develops  this  theory,  and  places  the  most  em- 
phasis upon  it  as  a  means  of  counteracting  the  evil  effects 
of  business  depressions.  We  have  seen  ^  that  this  econo- 
mist considers  all  unemployment  to  be  due  to  faulty  ad- 
justment between  standard  wage  rates  and  rates  normal  to 
conditions  of  supply  and  demand  in  the  labor  market  at\ 
any  given  time.  If  the  demanded  wage  rate  is  in  excess  of 
that  which  would  be  established  by  all  the  laborers  in  a 
certain  market  competing  among  themselves  for  positions, 
with  given  demand  conditions,  unemployment  will  result, 
the  amount  of  unemployment  being  dependent  upon  the} 
amount  of  this  excess.^  The  possibility  of  maladjustment! 
between  standard  rates  and  those  rates  at  which  every  man  \ 
would  be  employed  is,  of  course,  increased  by  fluctuations 
in  the  demand  for  labor.  Hence,  if  rigid  rates  be  main- 
tained in  the  face  of  a  falling  demand,  it  is  inevitable  that 
a  number  of  workers  will  be  thrown  out  of  employment. 
Pigou's  conclusion  is  that  "  unemployment  is  likely  to  be 

1  Cf.  supra,  p.  49. 


8o     CONTEMPORARY  THEORIES  OF  UNEMPLO YMENT     [go 

I  greater,  the  more  rigidly  wage-rates  are  maintained  in  the 
j  face  of  variations  in  the  demand  for  labour."  ^ 
i  The  two  circumstances  impeding  the  necessary  plasticity 
of  wages  are  the  variability  in  the  purchasing  power  of 
standard  money,  and  the  absence  of  harmonious  co-opera- 
tion between  workers  and  employers.^  Such  lack  of  adjust- 
ment as  is  due  to  the  failure  of  money  wages  to  correspond 
to  changing  real  wages  might  be  in  part  at  least  obviated  by 
the  adoption  of  some  such  scheme  as  that  of  Fisher's  for 
giving  the  dollar  or  pound  a  fixed  purchasing  power. ^  The 
rigidity  in  wage  rates  due  to  the  fact  that  employers  and 
employees  do  not  understand  each  other's  problems,  and 
do  not  attempt  to  adjust  the  scale  of  wages  to  demand  fluc- 
tuations, is  to  be  eliminated  through  a  perfection  of  the 
methods  of  industrial  peace.  The  general  principle  of  the 
sliding  scale  is  endorsed  by  Pigou  as  a  means  of  securing 
this  adjustment.* 

Beveridge  looks  upon  elasticity  of  wages  as  of  minor 
importance,  as  his  analysis  of  unemployment  does  not  at 
all  correspond  with  that  of  Pigou.  He  endorses  the  gen- 
eral principle  of  lower  wages  in  bad  times  as  one  method 
of  putting  a  premium  on  getting  work  done  at  the  times 
when  employment  is  slack,  though  urging  the  necessity  of 
not  impairing  the  general  level  of  wages  through  such  tem- 
porary concessions.^ 

*  Unemployment,  p.  yy.  '  Ibid.,  pp.  79-88.       '  Ibid.,  pp.  125-28. 

*  Pigou  regards  the  prevention  of  industrial  disputes  as  vital  to  the 
prevention  of  unemployment.  Not  only  is  industrial  peace  advisable 
as  a  means  of  securing  elasticity  of  wages,  but  only  through  such  peace 
can  the  unemployment  due  to  the  stoppage  of  general  industry  by 
strikes  in  particular  fields  be  done  away  with.  A  full  discussion  of  his 
proposals  for  securing  machinery  for  collective  bargaining  and  con- 
ciliation is  not  possible  in  this  paper.  Cf.  Unemployment,  pp.  81-93, 
128-146. 

*  Unemployment,  pp.  231-2. 


Si]  contemporary  ENGLISH  theories  8i 

The  plans  above  discussed  have  all  aimed  at  lessening  the- 
amount  of  unemployment  itself.  There  remain  to  be  con- 
sidered two  measures  for  the  prevention  of  the  distress 
caused  by  industrial  fluctuations,  namely,  the  averaging  of 
work,  and  the  development  of  a  system  of  rural  homes, 
with  small  farm  plots,  for  city  workers/ 

The  averaging  of  work,  by  means  of  the  elasticity  of 
w^orking  hours,  is  a  method  of  meeting  fluctuations  that 
has  long  been  applied,  though  in  limited  fields.  Coal 
mining  and  cotton  spinning  in  England  are  conspicuous  for 
their  utilization  of  this  measure.  The  method  involves  the 
employment  of  the  full  number  of  workers  in  a  given  in- 
dustry, or  factory,  for  fewer  hours  per  week  during  periods 
of  trade  depression,  instead  of  the  retention  of  only  a  part 
of  the  force  on  full  time.  The  work  to  be  had  is  averaged 
over  the  whole  force.  Conversely,  in  times  of  abnormal 
industrial  activity,  the  force  necessary  during  normal  times 
is  worked  longer  hours,  in  preference  to  the  employment 
of  additional  men.  This  latter  policy  prevents  the  drawing  . 
into  an  industry  of  a  surplus  labor  reserve,  the  members 
of  which  can  find  employment  only  during  the  busy  season.^ 
The  working  of  shorter  hours  in  dull  seasons  is  almost 
universally  endorsed,  but  the  policy  of  overtime  in  busy 
periods,  which  is  urged  as  an  essential  element  in  the  same 
scheme,^  is  strongly  opposed  by  some.  This  is  particularly 
true  of  the  trade  unions.  Systems  of  sharing  work  by 
**  reducing  the  number  of  working  hours  per  day  per  man  " 
have  been  often  resorted  to  by  the  unions.*     Yet  overtime 

1  Two  further  measures,  unemployment  insurance  and  the  general 
assistance  of  unemployed  men,  are  taken  up  below,  pp.  107-117. 

2  For  a  discussion  of  labor  reserves,  cf.  infra,  pp.  84-97. 
'C/.  Beveridge,  pp.  220-2,  and  Pigou,  pp.  186-8. 

*C/.  S.  and  B.  Webb,  Industrial  Demojcracy  (London,  1902),  pp.  430 
452,  on  "Continuity  of  Employment."  Cf.  also  Report  of  Poor  Law 
Cotmnission,  appendix,  vol.  ii,  p.  124. 


82     CONTEMPORARY  THEORIES  OF  UNEMPLO YMENT     [82 

is  an  object  of  constant  attack  by  the  unions  and  their  sup- 
porters. Miss  Poyntz  attributes  seasonal  irregularity  in 
large  part  to  this  as  a  cause/  The  minority  of  the  Poor 
Law  Commission  take  a  similar  stand,  contending  that  legal 
limitation  of  overtime  forces  employers  to  regularize  their 
work,  and  thus  prevents  excessive  seasonal  fluctuations.^ 
Some  very  sound  criticisms  of  the  short- time  expedient  are 
made  by  Rowntree  and  Lasker.  Their  statistics  show  that 
its  applicability  is  limited,  in  the  main,  to  the  highly  organ- 
ized trades.  The  chief  dangers  inherent  in  this  method  of 
meeting  fluctuations  are  that  it  "  places  the  whole  burden 
of  meeting  the  difficulty  upon  the  workers,  regardless  of 
their  individual  ability  to  bear  it,"  and  ''  conceals  the  evil 
of  unemployment  while  doing  nothing  to  lessen  it."  ^  A 
deterioration  in  the  workers'  standard  of  living  is  feared 
by  these  investigators  if  there  be  a  general  adoption  of  such 
a  policy,  though  as  a  temporary  expedient,  within  a  limited 
field,  it  is  practicable. 

A  second  method  of  relieving  the  distress  due  to  unem-^ 
ployment,  while  making  no  attempt  to  touch  unemployment 
itself,  is  the  planned  ''decentralization  of  town  population  " 
through  the  provision  of  plots  of  rural  land  as  homes  for 
town  workers.  Among  the  authorities  dealing  primarily 
with  unemployment,  Rowntree  and  Lasker  are  practically 
alone  in  their  emphasis  upon  this  measure,  and  in  their 
careful  exposition  of  the  plan.* 

When  all  the  preventive  measures  have  been  worked  out 
and  applied,  it  is  contended  that  fluctuations  will  persist^ 
that  manual  laborers  will  have  to  face  periods  of  unem- 

*  Seasonal  Trades,  p.  63. 

^Minority  Report  of  Royal  Commission  on  the  Poor  Laws  (Parlia- 
mentary edition),  p.  1185,  footnote.     (Quoted,  Pigou,  p.  187.) 
'Rowntree  and  Lasker,  Unemployment,  pp.  79-80. 

*  Ibid.,  pp.  262-89. 


83]  CONTEMPORARY  ENGLISH  THEORIES  85 

ployment.  Basing  their  opinion  upon  a  careful  study  of 
conditions  in  Belgium,  these  authorities  propose,  as  a 
method  of  preventing  the  deterioration  and  demoralization 
that  accompany  the  periods  of  idleness  of  urban  workers, 
a  scheme  enabling  workers  to  reside  in  the  country  while 
working  in  the  cities.  There  are  three  essential  economic 
conditions  involved  in  the  working  out  of  such  a  plan — the 
securing  of  land  in  small  plots  and  in  the  desired  localities, 
cheap  and  rapid  transit  between  town  and  country,  and  the 
opportunity  of  securing  capital  upon  easy  terms  for  the 
erection  of  houses.  That  these  conditions  can  be  fulfilled 
in  England  as  well  as  in  Belgium  is  the  fervent  opinion  of 
the  two  authors.  The  trouble  involved  is,  to  their  minds, 
more  than  balanced  by  the  unquestionable  gains  in  the 
health  and  character  of  the  working  classes  which  could  be 
secured  under  such  a  system.^ 

A  similar  proposal,  essentially  for  the  purposes  of  coun- 
teracting the  rural  exodus,  solving  the  agricultural  labor 
problem  and  re-creating  the  old  yeomanry,  is  elaborated  by 
Miss  Dunlop  ^  in  concluding  a  comprehensive  analysis  of 
the  whole  rural  problem.  Tenancy  rather  than  ownership 
is  requisite  for  the  building  up  of  a  small  farm  system, 
Miss  Dunlop  claims,  citing  the  failure  of  the  Allotments 
Act  of  1892  to  prove  the  point.  Greater  success  is  looked 
for  from  the  Small  Holdings  and  Allotments  Act  of  1907, 
under  the  provisions  of  which  60,889  acres  were  acquired 
within  two  years.  It  is  interesting  to  hear  that  the  Small 
Holdings  Commission,  who  are  administering  the  Act,  con- 

^  Their  chapter  on  "  A  Valuable  Suggestion.'  from  Belgium  "  embodies 
a  big  idea.  It  is  interesting  as  the  only  one  of  their  suggestions 
which  goes  back  to  that  which  they  consider  to  be  the  fundamental 
cause  of  unemployment  —  synchronous  idleness,  or  but  partial  utiliza- 
tion of  the  three  factors  in  the  creation  of  all  wealth — land,  labor  and 
capital.    Cf.  p.  68. 

^  The  Farm  Laborer,  pp.  221-52. 


84     CONTEMPORARY  THEORIES  OF  UNEMPLO YMENT     [84 

tend  that  the  best  method  of  establishing  small  holdings  is 
through  letting  an  area  of  land  to  a  co-operative  association 
for  cultivation.^ 

5.    THE   LABOR   RESERVE 

From  the  question  of  industrial  fluctuations  we  pass  to 
the  third  of  the  main  causes  of  unemployment — the  main- 
tenance of  labor  reserves.  The  fact  of  the  existence  of 
chronic  over-supplies  of  casual  labor  in  various  occupations, 
with  resulting  under-employment  and  destitution,  has  long 
been  recognized.  Booth  and  his  co-workers,  in  their  survey 
of  the  working  people  of  London  in  the  late  8o's  and  early 
90's,  described  it."  Sidney  Webb,  writing  at  about  the 
same  time,  testified  to  "  the  fearful  daily  struggle  for  bread 
at  the  Dock  gates."  ^  But  the  discovery  of  the  reason  for 
this  "  chronic  and  ubiquitous  over-supply  of  casual  labor," 
which  the  Webbs  term  "  perhaps  the  most  momentous  of 
this  generation  in  the  realm  of  economic  science,"  *  was 
only  recently  made.     It  is  Beveridge  who  has  made  the 

^  The  Farm  Laborer,  p.  239.  Kropotkin's  Fields,  Factories  and 
Workshops  (London,  1913),  contains  valuable  data  on  the  question  of 
the  small  farm  system.     Cf.  especially  chs.  iii,  iv  and  v  (pp.  79-240). 

2  Charles  Booth,  Life  and  Labour  of  the  People  in  London,  first 
series,  "  Poverty,"  1892-3.  Vol.  i,  pp.  37-50,  a  vivid  description  of  the 
living  and  working  conditions  of  the  four  lowest  classes;  pp.  146-155, 
on  the  causes  of  poverty ;  see  especially  p.  152  for  a  partial  anticipation 
of  Beveridge  on  labor  reserves.  Vol.  iv,  pp.  12-36,  "The  Docks,"  by 
Beatrice  Potter  (Mrs.  Sidney  Webb).  See  also  vol.  iii  of  second 
series  (vol.  vii  of  complete  set),  pp.  392-432,  for  a  later  description  of 
dock  labor.  Second  Series,  "  Industry,"  1895-1903.  Vol.  i  (vol.  v  of 
complete  set),  pp.  87-135,  on  conditions  of  employment  in  the  building 
trades.  Detailed  descriptions  of  the  different  trades  are  given  in  vols, 
i,  ii,  iii,  iv  of  the  series  (vol.  v,  vi,  vii,  viii  of  complete  set).  Vol.  v 
(vol.  ix  of  complete  set)  contains  valuable  material  on  the  irregularity 
of  earnings,  pp.  228-^2. 

'Sidney  Webb,  The  London  Programme  (London,  1891),  p.  7. 

*  Prevention  of  Destitution,  p.  130. 


85]  CONTEMPORARY  ENGLISH  THEORIES  85 

most  original  and  most  intensive  studies  in  this  field.  Of 
the  contemporary  writers,  none  have  materially  added  to 
Mr.  Beveridge's  analysis  of  the  problem.^ 

There  are  these  observed  facts  to  be  explained :  The  dis- 
tress from  want  of  employment  is  chronic.  An  "  irreduc- 
ible minimum  "  of  unemployment  exists  in  all  trades  at  all 
times.  Trade-union  statistics  prove  that  this  unemploy- 
ment is  due  to  loss  of  time  by  many,  not  to  the  chronic  idle- 
ness of  a  few.  The  typical  applicant  to  distress  committees, 
moreover,  is  not  unemployable,  but  industrial,  a  casual 
laborer.  That  this  unemployment  is  due  to  an  excessively 
rapid  increase  of  population  is  disproved  by  known  facts — 
unemployment  in  rapidly  growing  industries,  increasing 
productivity  of  labor,  and  the  rising  remuneration  of  labor, 
which  proves  it  to  be  of  increasing  importance  in  pro- 
duction. 

The  explanation  of  the  existence  of  this  irreducible  min- 
imum of  unemployment  is  found  in  the  labor  reserve  which 
tends  to  accumulate  in  modern  industries.  This  reserve  of 
labor  is  made  up  of  ''  the  men  who  within  any  given  period 
are  liable  to  be  called  on  sometimes  but  are  not  required 
continuously."  ^  Its  size  depends  upon  the  number  of  sep- 
arate employers,  the  irregularities  of  their  separate  busi- 
nesses and  of  the  industry  as  a  whole,  the  relative  mobility 
of  labor,  the  average  length  of  engagements,  and  the  extent 
to  which  chance  prevails  in  the  hiring  of  workers.  Condi- 
tions in  any  one  of  these  respects  may  be  such  as  to  result 
in  the  development  of  a  "  stagnant  pool  "  of  labor  in  an 
industry;  the  size  of  the  reserve  may  be  increased  by  the 
cumulative  action  of  any  or  all  of  the  other  factors.  Bev- 
eridge's analysis  of  their  separate  and  mutual  effects  upon 
the  labor  market  may  be  briefly  summarized : 

^  Unemployment,  "The  Reserve  of  Labor,"  ch.  v,  pp.  68-110. 
^  Ibid.,  p.  102. 


86     CONTEMPORARY  THEORIES  OF  UNEMPLOYMENT     [86 

The  number  of  workers  who  gather  in  any  given  center 
of  the  labor  market  will  tend  to  equal  the  maximum  num- 
ber who  may  be  able  to  obtain  employment  in  that  center. 
If  each  employer  in  a  certain  industry  maintains  his  own 
center  of  employment,  so  that  no  man  working  for  him 
works  for  any  other  employer  in  that  industry,  a  separate 
reserve  will  be  built  up  for  each  of  them.  If  the  volume 
of  the  business  of  each  varies  from  day  to  day,  week  to 
week,  or  month  to  month,  the  number  of  workers  employed 
and  "  at  the  gate  "  will  tend  to  equal  the  maximum  number 
employed  during  the  busiest  period.  If  the  term  of  en- 
gagement is  brief,  and  if  the  element  of  chance  enters  in  the 
selection  of  workers,  the  matter  is  further  complicated  and 
the  reserve  is  further  swelled.  With  no  discrimination 
whatsoever,  every  man  will  in  the  long  run  get  as  much 
employment  as  every  other  man.  The  number  of  competi- 
tors for  positions  in  each  given  center  of  employment  will, 
therefore,  tend  to  increase  until  the  average  remunera- 
tion received  by  each  reaches  the  subsistence  level  of  the 
class  of  men  employed.  If  the  average  pay  be  below  this, 
certain  men  will  have  to  withdraw;  if  it  be  above  the  sub- 
sistence level,  newcomers,  having  equal  chances  for  em- 
ployment, will  attach  themselves  to  the  industry.^ 

Assume  now  that  instead  of  each  employer  drawing  his 
labor  supply  from  his  own  reserve  there  is  perfect  mobility 
of  labor  within  the  given  industry;  the  reserve  will  tend  to 
equal  the  maximum  number  employed  in  the  industry  as  a 
whole  at  the  busiest  season.  The  separate  fluctuations  of 
individual   employers   will   here   partially  neutralize   each 

*  It  should  be  noted  that  the  greater  the  degree  of  skill  required,  and 
the  stronger  the  barriers  to  admittance  to  the  given  occupation,  the  less 
applicable  is  this  reasoning.  The  casual  occupations  are  largely  residual 
in  character,  however;  being  unskilled j  they  are  subject  to  "constant 
and  unlimited  pressure  of  competition  downwards  from  every  other 
grade  of  industry." 


87]  CONTEMPORARY  ENGLISH  THEORIES  87 

other,  and  so  cut  down  the  necessary  reserve.  The  author 
ilkistrates,  this  point  by  assuming  ten  centers  of  casual  em- 
ployment, each  employing  a  minimum  of  50  men  and  a 
maximum  of  100  men.  A  total  force  of  1000  men  will  thus 
be  maintained.  In  the  industry  as  a  whole,  however,  the 
minimum  number  employed  is  700,  the  maximum  800. 
With  perfect  fluidity  of  labor  a  reserve  of  100  men  will 
suffice,  and  the  extra  200  men  who  have  been  living  in  an 
under-employed  condition  forced  out.^  Thus,  the  greater 
the  degree  of  mobility  of  labor,  the  smaller  will  be  the 
necessary  reserve  maintained  in  an  industry.  An  excessive 
element  of  chance,  complete  absence  of  selection  in  em- 
plo}Tnent,  would,  of  course,  vitiate  the  favorable  results  of 
mobility  in  the  cutting  down  of  the  reserve. 

On  the  basis  of  this  reasoning  Beveridge  distinguishes 
three  elements  in  the  total  reserve  of  labor  for  any  occupa- 
tion :  those  men  representing  fluctuations  in  the  total  volume 
of  work  in  the  industry  as  a  whole;  those  representing  the 
element  of  friction  in  the  labor  market ;  and  those  "  at- 
tracted and  retained  by  the  perpetual  chance  of  work."  ^ 

This  tendency  toward  the  accumulation  of  reserves  exists 
in  varying  degrees  of  strength  in  practically  all  industries, 
though  seen  in  its  most  vicious  forms  in  the  casual  occupa- 
tions. The  reserve  as  such  is  a  "  normal  industrial  phe- 
nomenon," necessary  in  all  the  industries  liable  to  fluctua- 
tions in  volume.  This  needed  power  in  a  given  industry 
may  be  maintained,  without  producing  distress,  either 
through  a  high  wage  level,  unemployment  insurance,  or 
elasticity  of  hours.     Usually,  however,  faulty  methods  of 

^  Beveridge,  pp.  77-8. 

'  Ihid.,  p.  81.  Beveridge  illustrates  and  emphasizes  his  arguments  on 
these  points  by  reference  to  the  conditions  at  the  London  Docks,  where 
all  the  factors  giving  rise  to  labor  reserves  may  be  seen  in  active  opera- 
tion. 


88     CONTEMPORAR  Y  THEORIES  OF  UNEMPLO  YMENT     [88 

securing  the  reserve  power  are  resorted  to ;  the  men  of  the 
reserve  suffer  a  continuous  '*  leakage  of  employment,"  and 
there  results  the  demoralizing  evil  of  under-employment — 
the  reduction  of  earnings  to,  or  even  below,  the  level  of 
bare  subsistence.  Though  all  the  members  of  a  labor  re- 
serve are  subject  to  irregularity  of  employment,  it  is  only 
that  element  which  is  called  on  "  often  enough  to  be  pre- 
vented from  drifting  away  elsewhere,  but  not  often  enough 
to  obtain  a  decent  living  "  ^  which  constitute  the  "  under- 
employed." It  is  in  the  casual  occupation,  to  which  en- 
trance is  free  and  in  which  every  one  has  a  chance  of  secur- 
ing work,  that  the  incessant  competition  of  low  subsistence 
standards  works  out  in  demoralizing  under-employment. 

The  deteriorating  effect  of  unemployment  will  be  touched 
upon  in  considering  the  personal  factor.^  The  same  vicious 
reaction  upon  personal  character,  the  perpetuation  and  in- 
tensification of  the  conditions  conducing  to  reduce  indi- 
viduals to  casual  work,  is  characteristic  of  under-employ- 
ment. Wages  are  inefficiently  spent;  wives  and  children 
are  forced  into  industry;  the  securing  of  public  relief 
prompts  a  descent  into  the  unemployable  class.  Finally, 
there  is  the  fact  that  in  a  world  where  chance  rules  supreme, 
where  "  the  good  are  not  more  successful  in  securing  work 
than  the  evil,"  personal  merit  and  honesty  are  almost  draw- 
backs. "  No  class  in  the  community,"  says  the  minority  of 
the  Poor  Law  Commission,  "  could  withstand  the  demoral- 
izing influence  of  such  a  view  of  life  and  such  a  system."  ^ 

Beveridge's  analysis  of  the  labor  reserves  is,  as  has  been 
noted,  the  most  comprehensive.  Pigou's  approach  to  the 
problem  is  somewhat  different,  his  method  involving  far 
more  of  abstract  reasoning  than  does  that  of  the  practical 

1  Beveridge,  p.  io6.  2  (^f^  infra,  pp.  100,  102. 

'  Minority  Report,  pt.  ii,  p.  218. 


89]  CONTEMPORARY  ENGLISH  THEORIES  89 

unemployment  relief  administrator,  Mr.  Beveridge.  Pro- 
fessor Pigou  points  out  a  double  cause  for  the  origin  of 
reserves.  He  considers  that  unemployment  is  due  to  lack 
of  adjustment  between  demanded  or  established  wage  rates 
and  the  normal  competitive  rates  at  which  all  workers  in  a 
given  market  could  secure  employment.^  If,  now,  in  any 
given  occupation  the  actual  wage  has  been  raised  artificially 
above  the  level  ruling  for  similar  work  elsewhere,  new  men 
will  be  drawn  into  the  occupation  until  the  expectation  of 
earnings  ( "  the  wage  rate  multiplied  by  the  chance  of  em- 
ployment ")  is  reduced  to  the  level  of  earnings  that  prevail 
outside.^  If  the  artificial  increase  be  ten  per  cent,  ten  per 
cent  of  the  men  assembled  there  will,  on  the  average,  be 
unemployed.  This  holds  true,  however,  only  where  the 
method  of  engagement  is  of  the  casual  type.  Where  effec- 
tive barriers  are  maintained,  even  though  the  attractive  force 
of  high  wages  is  felt,  an  inflow  of  workers  will  be  pre- 
vented. 

Closely  allied  with  this  cause  of  labor  reserves  is  another 
factor,  that  of  industrial  fluctuations.  The  rates  in  occu- 
pations giving  irregular  employment  must  be  higher  than 
those  affording  regular  employment  for  two  reasons  —  to 
compensate  for  greater  uncertainty  of  employment,  and  to 
build  up  reserves  which  can  be  used  in  busy  times.  Thus 
the  wage  rate  in  fluctuating  occupations  will  be  such  as  to 
attach  to  such  occupations  "  a  number  of  work-people 
roughly  intermediate  between  the  number  for  whom  em- 
ployment at  that  rate  can  be  found  in  good  times  and  in 
bad  times,  respectively."  ^  Wage  rates  above  normal  are 
thus  the  prime  cause  of  the  creation  of  reserves  of  labor, 
according  to  Pigou's  reasoning. 

1  Cf.  supra,  p.  49. 

'  Pigou,  Unemployment,  pp.  54-7.  '  Ibid.,  p.  97. 


go     CONTEMPORARY  THEORIES  OF  UNEMPLO  YMENT     [go 

The  minority  of  the  Poor  Law  Commission  accept  Bev- 
eridge's  analysis  of  labor  reserves  unqualifiedly.  Both 
majority  and  minority  reports  condemn  in  strong  words 
the  system  which  creates  these  "  stagnant  pools  "  of  labor, 
and  subjects  industrial  workers  to  the  enervating  influence 
of  chronic  under-employment.  Three  sets  of  special  in- 
vestigators were  sent  out  by  the  Royal  Commission  to  work 
on  unemployment  and  allied  problems.  "All  these  inquirers 
.  .  .  starting  on  different  lines  of  investigation  and  pursuing 
their  researches  independently  all  over  the  kingdom  .  .  . 
came,  without  concert,  to  the  same  conclusion,  namely,  that 
of  all  the  causes  or  conditions  predisposing  to  pauperism, 
the  most  potent,  the  most  certain,  and  the  most  extensive 
in  its  operation  was  this  method  of  employment  in  odd 
jobs."  "All  these  (other)  conditions  (low  wages,  insani- 
tary conditions,  excessive  hours  of  labor,  outdoor  relief, 
drunkenness)  injurious  though  they  are  in  other  respects, 
were  not  found,  if  combined  with  reasonable  regularity  of 
employment,  to  lead  in  any  marked  degree  to  the  creation 
of  pauperism."  ^ 

6.    PROPOSED   REMEDIES    FOR    UNDER-EMPLOYMENT 

The  system  of  labor  reserves  has  a  bearing  upon  the 
problem  of  unemployment  only  in  that  it  is  the  chief  factor 
in  the  creation  of  under-employment.  It  is  not  the  reserves 
of  labor  which  are  to  be  done  away  with,  therefore,  but  the 
resulting  evils.  The  problem,  Beveridge  says,  is  essentially 
one  of  business  organization — "  that  of  providing  a  reserve 

^Minority  Report,  pt.  ii,  pp.  195-6.  A  study  of  the  many  questions 
concerning  casual  labor,  under-employment,  etc.,  which  are  connected 
with  the  subject  of  labor  reserves  cannot  be  entered  upon  here.  In 
addition  to  the  references  quoted,  valuable  material  on  the  subject, 
statistical  and  otherwise,  can  be  found  in  the  Report  of  the  Special 
Committee  on  Unskilled  Labor,  Charity  Organization  Society  (London, 
1908) ;  cf.  also  Report  of  the  Royal  Commission  on  the  Poor  Laws,  pt. 
vi,  ch.  i  (vol.  i,  pp.  427-31)  ;  Prevention  of  Destitution,  pp.  129-33. 


91  ]  CONTEMPORARY  ENGLISH  THEORIES  91 

of  labor  power  to  meet  fluctuations  in  such  a  way  as  not  to^ 
involve  distress."  ^  It  is  an  industrial  method  which  is  to 
be  reformed. 

The  remedying  of  the  baneful  results  of  the  present 
labor-reserve  system  involves  three  distinct  steps.  First 
must  come  the  organization  of  the  labor  market,  the  secur- 
ing of  organized  fluidity  of  labor  by  means  of  a  national 
system  of  labor  exchanges.  Secondly,  a  policy  of  "  de- 
casualization  "  must  be  carried  through,  a  strict  system  of 
concentrating  all  irregular  work  upon  the  smallest  possible 
number  of  men  necessary.  Lastly,  provision  must  be  made 
for  the  absorption  of  the  surplus  of  casual  labor  who  are 
excluded  from  the  chance  of  work  by  the  enforcement  of 
the  policy  of  concentration  involved  in  decasualization. 

The  advisability  of  a  national  system  of  labor  exchanges  ^ 
has  been  touched  upon  in  considering  other  causes  of  un- 
employment. By  means  of  these  exchanges  men  thrown 
out  of  employment  by  changes  of  industrial  structure^ 
may  be  guided  to  new  occupations.  Men  turned  out  be- 
cause of  advancing  age  *  can  be  fitted  into  old  men's  places, 
which  can  be  ferreted  out  by  such  agencies.  Juvenile 
workers  ^  can  be  advised  as  to  industrial  opportunities,  and 
the  flowing  stream  of  entrants  into  industry  can  be  guided 
into  channels  where  permanent  work  awaits  them.  The 
dovetailing  of  seasonal  industries  and  the  provision  of 
subsidiary  occupations  ^  can  be  best  attempted  through  such 
a  system. 

But  it  is  with  the  men  of  markedly  discontinuous  em- 
ployment, the  men  who  are  chronically  under-employed, 

*Beveridge,  Unemployment,  p.  no. 

^Cf.  suprGf  p.  37,  for  a  summary  of  the  provisions  of  the  Labor 
Exchanges  Act. 
3  Supra,  p.  53.  *  Supra,  p.  54. 

5  Supra,  p.  37.  «  Supra,  pp.  67,  68. 


92     CONTEMPORARY  THEORIES  OF  UNEMPLO YMENT     [92 

that  a  labor-exchange  system  "  reaches  its  highest  utility." 
Frederick  Harrison  has  forcefully  described  the  condition 
of  the  men  of  this  class.  ''  In  most  cases  the  seller  of  a 
commodity  can  sell  it  or  carry  it  about  from  place  to  place 
and  market  to  market  with  perfect  ease.  He  need  not  be 
on  the  spot;  he  can  generally  send  a  sample;  he  usually 
treats  by  correspondence.  ...  It  is  totally  otherwise  with 
a  day  laborer.  .  .  .  He  must  himself  be  present  at  every 
market,  which  means  costly  personal  locomotion.  He  can- 
not correspond  with  his  employer ;  he  cannot  send  a  sample 
of  his  strength;  nor  do  employers  knock  at  his  cottage 
door."  ^  It  is  with  this  class  that  the  system  of  personal 
application,  of  labor-hawking,  of  aimless  and  undirected 
wandering  in  search  of  work  universally  persists.  Mobility 
in  the  labor  market,  which  has  been  "demanded  by  econo- 
mists since  Adam  Smith,"  is  secured  with  the  maximum  of 
friction  and  the  maximum  of  distress  among  the  working 
classes.  The  consensus  of  opinion  is  so  strongly  in  favor 
of  a  national  co-operating  system  of  free  labor  exchanges 
that  little  space  need  be  given  here  to  the  various  arguments 
in  favor  of  it.  The  majority  of  the  Poor  Law  Commission 
look  upon  a  comprehensive  system  for  assisting  the  mobil- 
ity of  labor,  "  based  upon  industrial  supply  and  demand  " 
as  imperatively  necessary.^  The  minority  express  even 
more  emphatically  the  need  of  such  a  system.^  Professor 
Pigou  states  that  organized  and  intelligent  fluidity  of  labor 
would  make  unnecessary  the  maintenance  in  irregular  occu- 
pations of  wage  rates  so  far  above  the  normal  as  to  retain 
a  reserve  of  labor  for  use  during  busy  seasons.* 

1  Quoted,  F.  A.  Walker,  The  Wages  Question  (N.  Y.,  1886),  pp.  183-4. 
^Report  of  Poor  Law  Commission,  pt.  vi,  ch.  4  (vol.  i,  pp.  505-17). 
'  Minority  Report,  pt.  ii,  pp.  248-67.     Cf.  also  Prevention  of  Destitu- 
tion, ch.  vi,  passim. 
*  Pigou,  Unemployment,  pp.  146-70.    A.  L.  Bowley,  in  an  article  on 


93]  CONTEMPORARY  ENGLISH  THEORIES  93 

An  adequate  national  system  of  labor  exchanges  having 
once  been  established,  the  enforcement  of  a  policy  of  strict 
decasualization  is  the  next  step  necessary  for  the  elimina- 
tion of  under-employment. 

The  irregularity  of  demand  which  lies  at  the  root  of 
under-employment  cannot  be  prevented.  But,  through  the 
agency  of  the  labor  exchanges,  the  separate  reserves  of 
labor  maintained  by  the  individual  employers  for  the  pur- 
pose of  meeting  these  fluctuations  can  be  replaced  by  one 
common  reservoir.  "  The  Stagnant  Pools  of  labor  can  be 
drained,"  ^  if  each  group  of  similar  employers  secure  all 
their  irregular  men  from  this  common  center.  The  Webbs 
propose  that  the  hiring  of  men  for  irregtdar  jobs  at  the 
government  labor  exchanges  be  made  compulsory  upon  em- 
ployers. Only  in  case  a  minimum  period  of  employment  of 
one  month  were  guaranteed  (subject  to  dismissal  for  mis- 
conduct, etc.)  could  employers  hire  men  through  other 
channels.^    An  equally  strong  plea  for  compulsion  is  made 

"  Wages  and  the  Mobility  of  Labor  "  {Economic  Journal,  March  1912, 
pp.  46-52)  throws  some  light  upon  the  probable  reflex  influence  of 
greater  mobility  upon  the  elasticity  of  wages  and  upon  the  amount  of 
unemployment,  which  is  of  particular  interest  in  comnection  with  Pro- 
fessor Pigou's  analysis  of  unemployment  as  depending  upon  wage 
rates.  In  cases  of  increasing  return,  claims  Mr.  Bowley,  the  ultimate 
effect  of  mobility  is  to  cause  wages  to  rise  to  a  higher  level  than  pre- 
viously, in  the  better-paid  districts.  In  cases  of  constant  or  diminish- 
ing return  the  rate  of  wages  ultimately  falls  in  the  district  of  immi- 
gration. (Labor  is  assumed  to  flow  from  the  regions  of  low  wages  to 
those  of  higher  wages.)  His  conclusion  as  regards  the  amount  of  un- 
employment is  that  it  will  be  diminished,  and  total  employment  will  be 
increased,  by  increasing  mobility  of  labor,  provided  that  there  is  a 
possibility  of  increasing  return,  and  that  the  local  labor  supply  in  the 
district  of  immigration  is  inadequate  for  the  full  development  of  the 
industries  of  the  region. 

'  Minority  Report,  pt.  ii,  p.  261. 

'  Ihid.,  pp.  261-2.    Cf.  also  the  testimony  of  Sidney  Webb  before  the 
Royal  Commission  on  the  Poor  Laws  (appendix,  vol.  ix,  pp.  194-5). 


94     CONTEMPORARY  THEORIES  OF  UNEMPLO YMENT     [94 

by  Beveridge.  "If  the  thing  cannot  be  done  voluntarily  it 
will  have  to  be  done,  and  will  be  done,  compulsorily.  A 
new  clause  in  the  Factory  Code,  e.  g.,  that  no  man  should 
be  engaged  for  less  than  a  week  or  a  month  unless  he  were 
taken  from  a  recognized  labor  exchange,  would  be  a  legiti- 
mate and  unobjectionable  extension  of  the  principle  that 
the  state  may  and  must  proscribe  conditions  of  employment 
which  are  disastrous  to  the  souls  and  bodies  of  its  citi- 
zens." ^  The  majority  of  the  Poor  Law  Commission,  it  is 
worthy  of  note,  report  against  such  compulsion.^ 

Once  it  were  secured  that  all  casual  labor  was  hired  at 
but  one  center  (or  at  several  co-operating  centers),  the 
second  step  in  the  decasualization  process  could  be  taken. 
Upon  certain  men,  selected  on  the  basis  of  efficiency,  em- 
ployment would  be  concentrated.  ".  .  .  .  successive  jobs 
under  different  employers  should,  so  far  as  possible,  be 
made  to  go  in  succession  to  the  same  individual,  instead  of 
being  spread  over  several  men,  each  idle  half,  or  more  than 
half,  his  time."  "'  A  definite  number  of  regularly  employed 
men,  securing  steady  incomes,  free  of  the  demoralizing  in- 
fluences of  uncertainty  and  irregularity  of  work  and  in- 
come, would  replace  the  heterogeneous  mass  of  under- 
employed, irresponsible  and  industrially  deteriorating 
casuals. 

The  five  elements  in  the  problem  of  the  labor  reserve 
were  noted  above.*  What  will  be  the  effect  on  each  of 
such  a  policy — concentration  of  work  through  the  agency 
of  the  labor  exchanges  ?  The  many  separate  centers  of  em- 
ployment are  replaced  by  one  center  in  each  district.     The 

^  Contemporary  Review,  April  1908,  p.  392.  (Quoted,  Pigou,  pp. 
159-60.) 

'  Report  of  Royal  Commission  on  the  Poor  Laws,  pt.  vi,  ch.  4. 
'  Beveridge,  p.  201. 
*  Cf.  supra,  p.  85. 


95]  CONTEMPORARY  ENGLISH  THEORIES  95 

lack  of  mobility  of  labor  is  transformed  into  "  orgagnized 
fluidity."  The  short-term  engagements  continue  (though 
employment  for  longer  periods  is  encouraged  by  the  com- 
pulsory employment  at  the  labor  bureau  of  short- job  men) 
but  many  short-term  jobs  are  combined,  to  give  fairly  reg- 
ular employment  to  the  individuals  securing  work.  There 
is  still  irregularity  in  the  separate  businesses,  but  their  fluc- 
tuations can  be  used  mutually  to  offset  each  other  by  dove- 
tailing through  the  exchanges.  And,  Anally,  the  vicious 
system  of  chance  engagements,  with  its  virtual  premium 
upon  personal  irregularity,  gives  way  to  a  method  under 
which  the  strictest  sort  of  personal  responsibility  can  be 
enforced.  With  the  policy  of  concentration  of  employment 
upon  the  minimum  number  necessary,  the  managers  of  the 
labor  bureaus  will  soon  weed  out  those  held  to  be  dishonest, 
ineflicient  and  unreliable.^  Only  in  such  a  policy  as  this 
(decasualization  through  a  national  system  of  labor  ex- 
changes), says  Beveridge,  is  to  be  found  the  remedy  for 
*'  the  most  urgent  part  of  the  unemployed  problem  —  the 
chronic  poverty  of  the  casual  laborer."  ^ 

There  remains  for  consideration  the  most  important  diffi- 
culty in  the  way  of  the  enforcement  of  a  decasualization 
policy — that  of  finding  ways  and  means  for  the  absorption 
of  the  surplus.  For,  inevitably,  the  concentration  of  em- 
ployment upon  some  means  the  complete  displacement  of 
others. 

Beveridge  supports  the  decasualization  policy  on  the  gen- 
eral principle  that  "  on  any  view  of  society,  one  man  well 
fed  and  capable  is  preferable  to  two  on  half  ratioos."  ^  If 
the  men  forced  out  find  work  elsewhere,  well  and  good. 
If  they  do  not  find  work,  it  is  either  because  they  are  ineffi- 

^  Cf.  Minority  Report,  pt.  ii,  pp.  266-7. 

^  Beveridge,  Unemployment,  p.  201.  ^  Ihid.,  p.  204. 


96     CONTEMPORARY  THEORIES  OF  UNEMPLO YMENT     [96 

cient  or  because  there  is  an  actual  surplus  of  labor  in  the 
country.  If  inefficient,  society  should  know  it  and  should 
care  for  them,  at  least  to  the  extent  of  preventing  the  bring- 
ing-up  "  in  semi-starvation  of  fresh  generations  of  ineffi- 
cients."  If  the  forced-out  men  constitute  a  real  surplus, 
they  should  be  left  no  alternative  but  emigration.  How- 
ever, Beveridge  states,  in  the  actual  enforcement  of  de- 
casualization,  discrimination  as  to  the  time  and  degree  of 
application  can  be  exercised.  In  good  times  it  can  be  hast- 
ened; afforestation  and  other  schemes  providing  fresh 
openings  for  labor  can  be  utilized  in  the  disposition  of  the 
surplus;  emigration  can  be  encouraged.  His  conclusion  is 
that  even  though  hardship  on  certain  individuals  be  in- 
volved, the  ultimate  advantage  of  securing  a  minimum  con- 
tinuity of  employment  for  those  who  are  left  outweighs  the 
temporar}^  difficulties.^ 

The  proposal  to  dispose  of  the  surplus  by  means  of  emi- 
gration is  made  by  various  writers.  Stanley  C.  Johnson, 
who  has  made  a  most  intensive  study "  of  emigration  from 
the  British  Isles  to  the  North  American  continent  concludes 
that  ".  .  .  of  all  the  members  of  our  community  who  are 
at  present  unemployed,  only  a  small  section  would  be  able 
to  benefit  by  any  system  of  emigration  to  America  which 
might  be  proposed."  ^  Mr.  Johnson's  conclusion  is  based 
upon  the  Webbs'  analysis  of  the  types  of  unemployed  men 
and  his  own  researches  as  to  the  qualities  required  for  suc- 
cessful emigration.  He  quotes  approvingly  Mr.  Herbert 
Samuel's  reservation  in  the  Report  on  Agricultural  Settle- 
ments: "  An  increase  of  numbers  has  not  added  to  the  de- 
gree of  unemployment.     A  decrease  of  numbers  does  not 

*  Cf.  Beveridge,  Unemployment,  pp.  199-209. 

'  A    History   of  Emigration   from   the    United   Kingdom   to  North 
America,  1763-1912  (London,  1913). 
'  Ihid.,  p.  303. 


97]  CONTEMPORARY  ENGLISH  THEORIES  97 

promise  to  reduce  it."  ^  Holding  that  as  yet  there  is  no 
serious  overcrowding,  Mr.  Johnson  directly  implies  that 
the  surplus  resulting  from  decasualization  can  be  utilized 
to  advantage  at  home." 

This  question  of  absorbing  the  surplus  is  taken  up  very 
comprehensively  in  the  report  of  the  minority  of  the  Poor 
Law  Commission.  With  the  exception  of  Rowntree  and 
Lasker,  who  touch  upon  the  possibility  of  putting  the  sur- 
plus, or  an  equivalent  number,  upon  the  land,^  the  subject 
is  not  developed  by  other  contemporary  English  authorities. 
The  inclusion  of  a  summary  of  the  minority  plan  is,  there- 
fore, deemed  advisable. 

It  is  the  belief  of  the  Webbs  and  the  subscribers  to  their 
report  that  "  there  exists  in  the  United  Kingdom  today  no 
inconsiderable  surplus  of  labor — not,  indeed,  of  workmen 
who  could  not  with  an  improved  organization  of  industry 
be  productively  employed,  but  of  workmen  who  are,  as  a 
matter  of  fact,  now  chronically  under-employed."  *  "  The 
surplus  of  labor  power  which  already  exists  in  the  partial 
idleness  of  huge  reserves  of  under-employed  men  .  .  .  will 
then  (after  decasualization)  for  the  first  time  stand  re- 
vealed and  identified  in  the  complete  idleness  of  a  smaller 
number  of  wholly  displaced  individuals."  ^  Three  social 
reforms  are  proposed,  by  the  adoption  of  which,  concur- 
rently with  the  adoption  of  the  measures  aimed  at  unem- 
ployment directly,  the  Webbs  believe  this  surplus  can  be 
absorbed. 

*  A  History  of  Emigration,  op.  cit.,  p.  305. 

'  The  valuable  statistics  and  comments  which  are  given  in  Mr.  John- 
son's book  throw  an  interesting  light  on  the  emigration  from  the 
United  Kingdom.  Though  its  relation  to  unemployment  and  poor-law 
administration  is  not  emphasized,  material  of  value  on  these  subjects 
is  contained  in  the  book. 

'Rowntree  and  Lasker,  Unemployment,  p.  142;  cf.  also  supra,  p.  82. 

*  Minority  Report,  pt.  ii,  p.  268.  ^  Ibid.,  p.  268. 


C^     CONTEMPORARY  THEORIES  OF  UNEMPLOYMENT     [98 

I.  The  Halving  of  Boy  and  Girl  Labor 
The  evils  of  the  system  under  which  juveniles  work,  the 
tendency  of  modern  industry  to  turn  out  boys  as  imskilled 
laborers,  are  emphasized  throughout  by  the  the  minority. 
With  the  apprenticeship  system  broken  down,  it  is  claimed 
that  the  necessary  training  between  the  ages  of  fifteen  and 
eighteen  can  only  be  provided  by  the  community  itself.^ 
The  proposal  of  the  authors  is  to  "  shorten  the  legally  per- 
missible hours  of  employment  for  boys,  and  .  .  .  (to)  re- 
quire them  to  spend  the  hours  so  set  free  in  physical  and 
technological  training."  ^  If  this  plan  were  adopted  at  the 
same  time  as  those  aiming  at  the  decasualization  of  indus- 
try, not  only  would  the  obvious  and  all-important  educa- 
tional advantages  be  secured,  but  one-half  of  the  employ- 
ment previously  had  by  juveniles  would  be  open  to  the  men 
turned  out  by  the  decasualization  process.* 

2.  The  Reduction  of  the  Hours  of  Labor  of  Railway  and 
Tramway  Servants 
While  stating  that  a  gradual  reduction  in  the  daily  hours 
of  labor  is  coming  about,  the  authors  state  that  this  has 
little  bearing  on  unemployment  and  none  at  all  on  under- 
employment. Though  the  working  hours  have  in  the  past 
been  reduced,  "  the  number  of  men  employed  has  not 
thereby  been  increased."  *     The  Webbs  do  contend,  how- 

1  Minority  Report,  p.  271.  2  Jljid.,  p.  272;  cf.  supra,  p.  58. 

3  Ihid.,  pp.  274-5. 

*Ibid.,  p.  275.  This  is  even  more  emphatically  stated  in  Mr.  Webb's 
closing  address  at  the  1912  Conference  on  the  Prevention  of  Destitu- 
tion. "He  .  .  .  emphasize(d)  the  fact  that  a  reduction  of  the  hours 
of  labor  could  not  do  anything  whatsoever  to  prevent  the  occurrence 
of  unemployment.  .  .  .  The  causes  which  produced  unemployment 
would  still  go  on,  even  if  they  reduced  the  hours  of  labor  to  four  per 
day."  (National  Conference  on  the  Prevention  of  Destitution  (1912), 
Papers  and  Proceedings  [London,  1912],  p.  473).  It  is  interesting  to 
note  the  complete  right- about- face  that  Mr.  Webb  has  made  in  this 


99]  CONTEMPORARY  ENGLISH  THEORIES  99 

ever,  that  in  one  great  industry,  that  of  the  railway  service, 
together  with  the  allied  omnibus  and  tramway  services,  the 
reduction  of  the  present  excessive  hours  would  actually  in- 
crease the  number  of  men  required,  and  thereby  afford  an 
opportunity  for  the  absorption  of  some  of  the  surplus  labor 
resulting  from  the  decasualizing  process. 

3.  The  Withdrawal  from  Industrial  Wage  Earning  of  the 
Mothers  of  Young  Children 
The  '*  boarding  out "  of  the  children  of  widows  and  de- 
serted wives  with  their  own  mothers  upon  a  stipend  suffi- 
cient for  their  full  support,  with  the  consequent  withdrawal 
of  these  women  from  industry,  is  urged  as  a  third  measure 
which  will  give  openings  for  the  absorption  of  the  surplus. 
The  inadequacy  of  the  relief  at  present  given  under  the 
poor  law,  combined  with  chronic  under-employment  of  the 
husbands  of  many  women  with  young  children,  has  forced 
thousands  of  these  persons  into  industrial  life.  Their  with- 
drawal, which  is  of  itself  extremely  desirable,  should  take 
place  concurrently  with  the  unemployment  relief  measures.^ 

regard.  In  The  Eight  Hours  Day  by  Sidney  Webb  and  Harold  Cox 
(London,  1891)  we  find  the  following  opinions  expressed:  "That  a  re- 
duction in  the  hours  of  labor,  when  it  results  in  a  diminution  in  average 
productivity,  does  result  in  the  employment  of  additional  workers  is 
proved  by  innumerable  instances"  (p.  108).  ".  .  .  several  instances  of 
the  beneficial  results  of  limiting  the  hours  of  labor  in  this  very  matter 
of  providing  for  the  unemployed"  are  given  in  a  footnote  (p.  108). 
Again  (p.  112),  the  authors  speak  of  "the  necessary  absorption  of  a 
portion  of  the  reserve  army  of  industry,"  the  unemployed,  and  the 
partially  employed  which  would  result  from  an  eight-hour  bill.  This 
contention  which  the  Webbs  at  present  hold  to  be  fallacious  is  repeated 
in  many  places  in  this  earlier  work. 

^  Minority  Report,  pp.  278-80.  Cf.  also  Prevention  of  Destitution,  pp. 
132-7.  Certain  remedies  for  the  evils  of  the  casual-labor  system,  as 
well  as  for  other  factors  in  destitution,  are  proposed  by  Booth  in  his 
first  report  upon  the  conditions  of  the  poor  in  London.  Charles  Booth, 
Life  and  Labour  of  the  People  in  London,  vol.  i  (first  series),  pp.  162- 
171. 


lOO  CONTEMPORARY  THEORIES  OF  UNEMPLOYMENT  [iqO 

7.    THE  PERSONAL  EQUATION  IN  THE  PROBLEM  OF 
UNEMPLOYMENT 

There  have  been  considered  above  those  general  factors 
in  unemployment  which  are  essentially  industrial  in  their 
nature,  which,  as  causes  of  unemployment,  have  at  least  no 
direct  connection  with  the  individual.  It  has  been  largely 
with  the  character  of  the  demand  for  labor,  and  with 
changes  in  that  demand,  that  the  study  has  been  engaged. 
The  supply  of  labor,  with  reference  to  the  bearing  of  the 
personal  factor  both  on  the  volume  of  unemployment  and 
upon  the  incidence  of  unemployment,  is  now  to  be  con- 
sidered. 

This  study  of  the  relation  of  personal  character  to  un- 
employment is  greatly  complicated  by  the  fact  that  there  is 
a  strong  reflex  influence  of  unemployment  and  irregular 
employment  upon  the  individual,  a  reaction  which  makes  it 
difficult  to  state  positively  which  is  dominantly  cause  and 
which  is  primarily  result — defective  personality  or  unem- 
ployment. This  difficulty,  which  will  be  referred  to  later, 
must  be  kept  in  mind  in  the  following  discussion. 

That  personal  deficiencies  ^  do  increase  the  total  volume 
of  unemployment  is  generally  agreed  upon,  though  Bev- 
eridge  takes  care  to  emphasize  the  relative  unimportance  of 
this  factor,  stating  that  ".  .  .  no  conceivable  improvement 
in  the  character  of  workmen  will  eliminate  the  main  eco- 
nomic factors  in  unemployment."  ^  In  two  ways  personal 
failings  may  increase  the  volume  of  unemployment.  In  the 
first  place,  gross  unwillingness  to  work  on  the  part  of  a 
parasitic  class  of  criminals  and  vagrants,  and  the  unwilling- 
ness of  a  grade  of  individuals  slightly  higher  in  the  scale 

*  Physical  incapacity  is  not  included  under  the  term  "personal  de- 
ficiency "  as  here  used. 
'  Beveridge,  Unemployment,  p.  138. 


lOi]  CONTEMPORARY  ENGLISH  THEORIES  loi 

to  work  continuously  will  obviously  have  this  effect/  Sec- 
ondly, personal  factors  common  in  a  greater  or  less  degree 
to  all  men,  such  as  lack  of  enterprise  and  lack  of  adapta- 
bility, increase  the  amount  of  unemployment  by  setting  up 
frictions  in  the  labor  market.^  This  evil,  though  more  diffi- 
cult to  isolate  and  study  than  the  first  named,  is  none  the 
less  of  importance. 

The  unemployable  class,  who  belong  in  the  first  division 
named  above,  have  been  objects  of  much  discussion,  and 
have  been  by  some  looked  upon  as  the  fundamental  element 
in  the  whole  problem  of  unemployment.  A  full  discussion 
of  this  subject  is  beyond  the  scope  of  this  paper,  but  certain 
diverse  views  as  to  the  make-up  of  the  class  may  be  men- 
tioned. 

W.  H.  Dawson,  in  his  book  The  Vagrancy  Problem,^ 
classifies  the  unemployable  into  four  types:  the  nomad 
vagabond,  who  lives  by  begging,  blackmail  and  pillage;  the 
settled  resident  loafer  of  the  towns ;  the  intermittent  loafer, 
who  usually  has  a  dependent  family;  and  the  female 
vagrant.*  Mr.  Dawson,  whose  strongly  repressive  policy 
of  relief  will  be  dealt  with  later,  does  not  attempt  to  delve 
back  into  the  causes  for  the  existence  of  these  types.'' 

^  Pigou  omits  from  his  book  any  discussion  of  these  types,  for,  by 
his  definition,  unemployment  means  "  involuntary  idleness  "  only. 

^  Cf.  Beveridge,  p.  137. 

'  (London,  1910.) 

*  The  Vagrancy  Problem,  pp.  2-5. 

^  There  is  a  mass  of  literature  in  the  field  of  vagrancy,  a  subject  which 
can  merely  be  mentioned  here.  C.  J.  Ribton-Turner,  in  A  History  of 
Vagrants  and  Vagrancy  (London,  1887),  gives  an  interesting  study  ot 
the  tramp  problem  in  England  and  in  continental  Europe.  Josiah  Flynt 
Willard's  Tramping  with  Tramps  (N.  Y.,  1901)  is  a  fascinating  picture 
of  vagrant  life  in  various  countries  as  seen  from  within.  The  Report 
of  the  Departmental  Committee  on  Vagrancy  (London,  1906)  records 
an  intensive  survey  of  vagrancy  in  Great  Britain. 


I02  CONTEMPORARY  THEORIES  OF  UNEMPLOYMENT  [102 

The  minority  of  the  Poor  Law  Commission  approach  the 
problem  in  another  way,  classifying  the  unemployable  on 
the  basis  of  the  industrial  route  traveled  before  becoming 
units  in  this  ''  wastage  of  the  wage-earning  class." 
Their  analysis  indicates  a  primary  emphasis  upon 
the  reflex  influence  of  periods  of  idleness  as  the  cause  of 
personal  deficiencies.  The  first  division  consists  of  those 
who  in  the  prime  of  life  drop  into  the  unemployable  class. 
From  the  men  who  have  lost  permanent  positions  through 
industrial  or  business  changes  there  is  a  small  but  steady 
stream.^  From  the  "  Men  of  Discontinuous  Employment/' 
making  high  wages  while  at  work  but  with  incessantly  re- 
curring periods  of  idleness,  the  descent  is  more  rapid." 
Personal  weaknesses  and  shortcomings  play  a  part  here, 
giving  the  degenerating  influences  fuller  play  than  they 
would  otherwise  have.  It  is  the  under-employed,  however, 
who  are  the  most  prolific  source  of  unemployables.' 
Though  individual  weaknesses  are  of  some  importance 
here,  also,  the  fundamental  cause  of  degeneracy  is  the  sys- 
tem under  which  the  men  of  this  class  work.  Charity  Or- 
ganization Society  workers  testified :  '*  It  is  not  that  the 
casual  man  has  a  larger  dose  of  original  sin  than  his  fel- 
lows; it  is  that  he  is  exactly  what  any  other  class  in  the 
community  would  become  .  .  .  were  they  submitted  for 
any  length  of  time  to  the  same  system  of  employment."  * 
The  willingness  of  the  wife  to  work,  and  the  opportunity 
to  keep  her  at  work  once  she  has  started,  are  factors  that 
were  found  to  make  the  road  to  the  unemployable  class 
much  easier  to  travel. 

The  second  source  of  unemployables,  according  to  the 
minority  analysis,  is  graduation  from  adolescence  into  that 

*  Minority  Report,  pt.  ii,  pp.  214-5.  ^  Ihid.,  pp.  215-17. 

^  Ibid.,  pp.  217-18.  *  Ibid.,  p.  217. 


I03]  CONTEMPORARY  ENGLISH  THEORIES  103 

class.  The  general  subject  of  "  blind-alley  "  employment, 
lack  of  industrial  training,  and  consequent  demoralization 
has  been  considered  above/  The  men  who  gravitate  into 
the  unemployable  class  from  the  premature  appearance  of 
old  age^  form  the  third  of  the  types  of  unemployables. 
This  subject  has  also  been  touched  upon,  and  need  not  be 
further  considered  here.^ 

Whatever  the  ultimate  source  of  this  class!,  however, 
whether  industrial  disorgamzation  or  personal  weakness,  it 
exists  and  is  a  factor  serving  to  increase  somewhat  the 
aggregate  volume  of  unemployment  occurring  at  any  one 
time.* 

In  its  effect  upon  the  incidence  of  unemployment  the  per- 
sonal element  is  of  obvious  impoTtance.  The  "  selective  in- 
fluence of  personal  character  "  is  all  pervasive.  The  weaker 
workers  in  factory,  store  or  office  are  first  turned  out  when 
industry  or  business  slackens.  Even  in  busy  times  it  is  the 
iess  efficient  workers  who  form  the  "  casual  fringe  "  about 
all  industries,  and  who  bear  the  burden  of  the  minor  indus- 
trial fluctuations.  Here  again  the  unfortunate  reflex  influ- 
ence of  the  periods  of  unemployment's  seen.  Idle  because 
of  their  weaknesses,  these  weaker  brothers  have  their  in- 
feriorities accentuated  by  their  idleness.^     Thus  unemploy- 

1  Cf.  supra,  p.  54  et  seq. 
^  Minority  Report,  p.  214. 
3  Cf.  supra,  p.  54. 

*  The  number  in  the  permanent  vagrant  class  was  placed  at  from 
20,coo  to  30,000  in  Great  Britain  as  a  whole,  by  the  Departmental  Com- 
mittee on  Vagrancy  which  reported  in  1906.  The  figures  on  this  subject 
given  by  'Rowntree  and  Lasker  in  their  survey  of  York  are  interesting. 
They  found  important  faults  of  character  among  18.6%  of  the  unem- 
ployed regular  workers  (pp.  54-5).  Among  the  "work-shy,"  moral 
delinquency  due  to  poor  heredity,  degrading  environment,  and  faulty 
education  was  an  outstanding  feature  (pp.  173-193). 

*  Cf.  Beveridge,  pp.  138-43. 


I04  CONTEMPORARY  THEORIES  OF  UNEMPLOYMENT  [104 

ment  and  individual  failings  perpetuate  each  other  in  a 
vicious  circle  of  cumulative  interaction. 

8.    PROPOSED  REMEDIES  FOR  UNEMPLOYMENT  DUE  TO 
PERSONAL  FAILINGS 

The  first  step  to  be  taken  in  the  campaign  against  the  un- 
employables  is  the  elimination  of  those  factors  which  are 
manufacturing,  say  the  minority/  a  new  generation  of  this 
class  every  ten  or  twelve  years.  Proposed  reforms  to 
accomplish  this  end  include  industrial  training,  and  all 
those  perfections  of  industrial  machinery  "  which  increase 
a  man's  chance  of  getting  work,  and  which  improve  his 
condition  when  unemployed  and  reduce  the  likelihood  of 
demoralization."  ^ 

Through  these  reforms  in  industrial  machinery,  more- 
over, especially  through  the  organization  of  the  labor  mar- 
ket, the  problem  of  the  unemployable  can  be  isolated.  De- 
casualization  will  make  it  impossible  for  the  semi-unem- 
ployable to  work  two  or  three  days  a  week.  The  incompe- 
tent casual  will  be  forced  out  of  industry  and  the  necessary 
disciplinary  treatment  can  be  given  him.^  Vagabond  wan- 
dering can  be  prevented,  since  the  excuse  of  seeking  em- 
ployment cannot  be  given  if  transportation  is  advanced 
through  the  labor  exchanges  to  all  men  securing  positions 
in  outlying  parts  of  the  country.*  By  making  registration 
at  the  labor  exchange  a  prerequisite  to  the  receipt  of  any 
form  of  public  assistance,  the  personal  responsibilty  of  hus- 
band and  father  can  be  brought  home,  and  this  more  subtle 
form  of  vagrancy  eliminated.^ 

*  Minority  Report,  pt.  ii,  p.  214. 

^  Rowntree  and  Lasker,  Unemployed,  p.  198.  The  latter  measures, 
dealing  with  men  while  unemployed,  are  discussed  below  (pp.  113-117)  ; 
the  general  reforms  referred  to  have  been  outlined  above. 

^  Cf.  Beveridge,  p.  215. 

*  Minority  Report,  pt.  ii,  p.  265.  ^  Ihid.,  pp.  266-7. 


105]  CONTEMPORARY  ENGLISH  THEORIES  105 

With  industry  thus  organized  so  that  the  unemployable 
is  marked  off,  and  steps  taken  to  prevent  the  re-creation 
of  the  type,  the  problem  of  dealing  with  the  present 
generation  of  the  "  work-shy  "  remains.  As  to  remedies 
we  have  a  rather  sharp  division  into  camps,  though  there 
is  some  considerable  area  of  common  agreement. 

A  system  of  detention  colonies  to  be  used  in  conjunction 
with  the  voluntary  training  schools  and  farm  colonies  for 
the  unemployed  ^  is  generally  agreed  upon  as  necessary. 
The  difference  of  opinion  comes  in  regard  to  the  character 
and  administrative  policy  of  these  colonies.  On  the  one 
side  stand  the  Departmental  Committee  on  Vagrancy,  which 
reported  in  1906  after  a  searching  investigation,  and  the 
majority  of  the  Poor  Law  Commission  of  1909.  The  gen- 
eral principle  on  which  they  stand,  that  of  repression,  is 
voiced  by  W.  H.  Daw^son:  ".  .  .  society  is  justified,  in  its 
own  interest,  in  legislating  the  loafer  out  of  existence."  ^ 
To  attain  this  end,  forced  labor  colonies  modeled  on  conti- 
nental plans  and  administered  by  the  police  as  penal  insti- 
tutions are  recommended.  Short  sentences  are  deprecated, 
committal  of  vagrants  for  from  six  months  to  three  years 
being  urged.  The  existing  casual  wards,  except  insofar  as 
transitionally  necessary,  are  to  be  discontinued,  cheap  hotels 
for  genuine  wayfarers  taking  their  place.  Within  the  colo- 
nies men  are  to  be  engaged  in  industrial  and  agricultural 
trades,  though  competition  with  free  industry  is  to  be 
avoided.^ 

^  This  subject  is  closely  allied  to  that  dealing  with  the  general  treat- 
ment of  unemployed  men  {infra,  pp.  113-117),  but  it  is  deemed  best  to 
consider  it  at  this  time.  In  practice  the  administration  of  the  two 
systems  might  be  closely  connected. 

2  Vagrancy  Problem,  p.  ix. 

'  The  Departmental  Committee  on  Vagrancy,  The  majority  of  the 
Poor  Law  Commission,  and  W.  H.  Dawson  are,  with  slight  differences 
of  opinion,  agreed  on  this  general  type  of  treatment.     For  a  summary 


Io6  CONTEMPORARY  THEORIES  OF  UNEMPLOYMENT  [io6 

Leaning  toward  a  somewhat  less  severe  policy,  aiming 
not  to  punish  but  rather  to  cure  the  men  of  this  class  of  the 
"  morbid  frame  of  mind  "  which  has  caused  them  to  be- 
come *'  work-shy,"  the  minority  propose  detention  colonies 
similar  in  their  general  constitution  to  those  referred  to 
above  but  administered  primarily  as  training  establishments 
and  having  nothing  to  do  with  the  police  authorities/  Con- 
tinuous employment  is  to  be  given  and  rigorous  discipline 
is  to  prevail.  Good  conduct  will  be  rewarded  by  promotion 
to  one  of  the  free  training  establishments.  A  similar 
method  of  dealing  with  vagrants  was  advocated  by  Edmond 
Kelly.^  He  emphatically  emphasized  the  reformation  side 
of  the  work  and  urged  the  absolute  separation  of  the  colo- 
nies from  both  penitentiaries  and  workhouses. 

As  to  the  treatment  of  the  problem  of  the  personal  factor 
in  unemployment  there  are,  thus,  certain  differences  of 
opinion,  but  the  broad  path  of  general  policy  is  clear.  The 
industrial  conditions  creating  the  type  need  to  be  dealt  with ; 
by  means  of  better  labor  market  organization  the  present 
generation  of  "  work-shys  "  should  be  isolated  for  separate 
treatment;  these  should  be  subjected  to  rigorous  disciplinary 
detention,  with  training  aiming  at  regeneration  of  those  who 
can  be  re-made  into  efficient  workers.  Those  personal  fail- 
ings in  all  workers  which  increase  the  frictions  of  industrial 

of  the  report  of  the  former,  cf.  Dawson,  The  Vagrancy  Problem,  pp. 
231-45.  Dawson's  own  plans  are  detailed  on  pp.  62-103  of  the  same 
book.  The  recommendations  of  the  majority  of  the  Poor  Law  Com- 
mission appear  in  their  report,  vol.  i,  pp.  548-9. 

*  Minority  Report,  pt.  ii,  p.  308.  The  earlier  attitude  of  the  Webbs 
toward  the  problem  of  the  unemployable  is  expressed  in  Industrial 
Democracy,  pp.  784-9-  Though  no  specific  remedial  measures  are  sug- 
gested, the  necessity  of  isolating  the  problem  before  it  can  be  ade- 
quately dealt  with  is  emphasized. 

'  The  Unemployables  (London,  1907).  Especially  valuable  for  the 
discussion  of  the  labor-colony  system,  which  is  strongly  advocated. 
Cf.  pp.  36-51  for  material  on  English  remedies. 


lo;]  CONTEMPORARY  ENGLISH  THEORIES  107 

movement  and  adaptation,  and  therefore  increase  somewhat 
the  aggregate  volume  of  unemployment,  may  in  part  be  elimi- 
nated by  some  such  measures  as  will  be  touched  upon,^  but 
reform  in  this  direction  involves  deeper  considerations  than 
those  concerned  with  the  particular  problem  of  unemploy- 
ment.^ 

9.    UNEMPLOYMENT   INSURANCE 

In  a  dynamic  industrial  state  unemployment  cannot  be 
prevented.  Business  and  industrial  activity  involve  indus- 
trial changes,  and  a  certain  amount  of  unemployment  is  a 
necessary  accompaniment  of  these  changes.  That  great 
amount  of  unemployment  which  exists  today  and  that  mini- 
mum of  unemployment  which  will  persist  must  be  dealt 
with  by  other  than  merely  preventive  measures  which  aim 
at  industrial  reformation.  Theories  as  to  the  methods  of 
providing  for  individuals  during  periods  of  unavoidable 
unemployment  are  of  two  types — those  dealing  with  insur- 
ance against  unemployment  and  those  concerned  with  public 
relief  measures. 

As  to  the  advisability,  on  principle,  of  unemployment  in- 
surance, there  seems  to  be  little  argument.  Given  the  facts, 
as  Mr.  Chiozza  Money  points  out,*  that  manual  work  is  for 
the  most  part  inherently  irregular,  and  that  uncertainty  of 

1  Cf.  infra,  pp.  113-117. 

'  W.  C.  D.  Whetham,  in  a  lecture  on  "  Eugenics  and  Unemployment " 
(Cambridge,  1910),  discusses  the  relation  of  racial  breeding  to  pauper- 
ism and  unemployment.  He  believes  that  these  problems  can  only  be 
solved  finally  by  an  improvement  in  the  "  innate  character  of  the  popu- 
lation." Considerable  material  on  the  general  subject  of  the  treatment 
of  vagrancy  in  Britain  and  other  countries  is  contained  in  a  Special 
Consular  Report  on  Vagrancy  and  Public  Charities  in  Foreign  Coun- 
tries issued  by  the  Bureau  of  Statistics  of  the  Department  of  State 
(Washington,  D.  C,  1893).  The  disorganized  form  of  presentation  of 
the  valuable  matter  it  contains  materially  lessens  its  usefulness. 

*  L.  G.  Chiozza  Money,  Insurance  versus  Poverty  (London,  1912),  pp. 
314,  317. 


I08  CONTEMPORARY  THEORIES  OF  UNEMPLOYMENT  [io8 

maintenance  due  to  an  irregular  income  is  demoralizing  in 
the  extreme,  it  is  incumbent  either  upon  the  workers  or 
upon  society  to  afford  regular  payment  for  irregular  work. 
That  this  should  be  done  through  some  form  of  insurance 
follows  from  the  limited  savings  of  the  individual,  the  im- 
possibility of  prophesying  individual  risks,  and  the  converse 
possibility  of  averaging,  and  thus  foreseeing  the  risks  in- 
curred by  a  body  of  men. 

I.  G.  Gibbon  states  that  three  conditions  are  necessary 
for  the  application  of  the  principle  of  insurance :  ^  first,  it 
must  be  possible  to  foretell  the  amount  of  the  risk  for  the 
group  which  is  to  be  insured ;  second,  the  risk  must  be  gen- 
eral to  the  members  of  the  group ;  third,  it  must  be  possible 
to  prevent  fraud.  Gibbon  contends  that  though  there  are 
few  trades  in  which  the  exact  fluctuations  of  employment 
can  be  foreseen,  and  though  changing  industrial  conditions 
in  the  future  may  change  the  risk,  it  is  possible,  with  a 
broad  margin  of  error,  to  secure  statistics  on  which  insur- 
ance premiums  can  be  based.  The  majority  of  the  Poor 
Law  Commission,  while  condemning  the  idea  of  general 
unemployment  insurance,  because  of  the  extreme  variations 
in  risk  and  the  probable  preponderance  of  "  bad  risks,"  be- 
lieve that  trade-group  insurance  is  possible,  because  the  risk 
within  a  given  trade  is  susceptible  of  fairly  exact  measure- 
ment.^ This  view  that  within  a  given  trade  sufficient  actu- 
arial certainty  for  insurance  can  be  secured  is  held  by  most 
of  the  English  authorities  on  the  subject,^  but  constant  at- 
tention, and  readiness  to  change  rates  with  greater  experi- 
ence are  advised.    That  voluntary  insurance  in  the  past  has 

1 1.  G.  Gibbon,  Unemployment  Insurance  (London,  1911),  pp.  14- ip- 
^  Report  of  the  Royal  Commission  on  the  Poor  Laws,  pt.  vi,  ch.  4. 
^  Cf.  EncyclopcBdia  Brittanica,  nth  ed.,  vol.  27,  pp.  578-80.    H.  Llewel- 
13m  Smith,  Secretary  to  the  Board  of  Trade,  is  quoted  on  the  subject. 
Cf.  also  Chapman  and  Hallsworth,  Unemployment  in  Lancashire  (Man- 
chester, 1909),  p.  no. 


I09]  CONTEMPORARY  ENGLISH  THEORIES  109 

been  successfully  worked  out  on  trade  lines  substantiates 
this  argument.  The  present  English  insurance  scheme,  as 
was  noted  above/  rests  on  a  trade  basis. 

The  second  condition,  that  the  risk  must  be  general  to 
the  members  of  the  group,  is  only  partially  fulfilled  as  re- 
gards unemployment.  Statistics  of  benefits  paid  by  certain 
trade  unions  are  evidence  that  unemployment  falls  more 
heavily  upon  the  ^'  weaker  brothers  "  within  a  group.  Year 
after  year  certain  individuals  exhaust  their  benefit,  while 
others  draw  little  or  none.  But  these  delinquent  members 
tend  to  be  squeezed  out  in  time ;  and  even  though  the  light- 
ning strikes  some  continuously,  all  are  subject,  in  greater 
or  less  degree,  to  periods  of  idleness.^  So  again,  with  a 
margin  of  error,  the  general  requirements  for  insurance  are 
met  in  the  trade  group.^ 

The  third  possibility  which  would  make  the  method  of 
insurance  inapplicable  is  that  of  fraud.  If  malingering  on 
a  large  scale  is  possible,  the  whole  scheme  would  obviously 
break  down.  If  the  insurance  be  voluntary,  by  trade  unions, 
it  is  largely  possible  to  prevent  this,  through  the  pressure 
of  opinion  and  the  knowledge  of  trade  openings  on  the 
part  of  the  members  generally.  Fraud  of  this  kind,  how- 
ever, is  one  of  the  chief  obstacles  to  government  schemes. 
The  best  way  of  combating  it  is  through  the  full  utilization 
of  a  labor-exchange  system  by  those  administering  the  in- 
surance. Voluntary  idleness  under  the  pretence  of  work 
would  not  be  possible  were  a  government  office  seeking  out 
vacancies.  Such  close  co-operation  between  the  insurance 
officials  and  the  labor-exchange  managers  is  provided  for 
by  the  National  Insurance  Act  of  191 1.  The  broad  con- 
clusion reached  by  the  English  students,  then,  is  that  un- 

1  P.  38. 

'  Cf.  Beveridge,  Unemployment,  pp.  140-2. 

» Cf.  Gibbon,  pp.  16-18. 


I  lo  CONTEMPORARY  THEORIES  OF  UNEMPLOYMENT   [no 

employment  ^  is  an  insurable  risk.  While  individuals  may 
point  to  faults  or  inadequacies  in  any  particular  system,  or 
even  weaknesses  in  the  method  itself,^  the  consensus  of 
opinion  is  that  insurance  in  one  form  or  another  is  needed. 
As  Beveridge  says,  it  is  a  direct,  flexible  and  immediate 
method  of  relieving  unemployment,  while  it  enables  the 
burden  of  an  expense  necessary  to  industry  to  be  borne  col- 
lectively instead  of  individually.^ 

On  the  question  as  to  whether  the  state  should  assist  in 
insurance  against  unemployment,  there  is  again  a  fairly 
uniform  agreement.  Tlie  inability  of  a  large  majority  of 
the  workers  to  make  this  provision  for  themselves  is  per- 
haps the  best  reason  for  such  assistance.*  Again,  as  a 
matter  of  self-protection  it  is  urged  that  the  state  should 
assist,  for  if  the  money  is  not  spent  in  this  way  it  will  have 
to  be  spent  in  relief  work  in  another  form,  the  beneficial 
effects  of  which  are  not  so  certain.  Habits  of  providence 
and  co-operation,  moreover,  are  said  to  be  stimulated  by  the 
encouragement  of  insurance  schemes.     From  another  point 

*  Unemployment  due  to  trade  disputes  and  to  a  few  other  specified 
causes  is  not  considered  to  warrant  the  payment  of  benefit. 

'  The  Webbs,  in  The  Prevention  of  Destitution,  emphasize  the  limita- 
tions of  insurance.  It  does  not  prevent  unemployment,  and  should 
not  be  considered  an  alternative  to  preventive  measures.  By  lessening 
the  distress  accompanying  unemployment  it  may,  they  say,  actually 
lead  to  an  increase  in  the  evil  itself  (pp.  159-63).  Rowntree  and 
Lasker,  in  a  joint  paper,  point  out  the  wide  field  that  cannot  be  touched 
by  such  measures;  Revue  Internationale  du  C homage  (Paris,  1911),  pp. 
147-8. 

'  Beveridge,  Unemployment,  pp.  225-7. 

*  Mr.  Money  estimates  that  in  1908  there  were  17,050,000  manual 
workers  and  small  salary  earners  in  Great  Britain.  Of  these,  about 
700,000  belonged  to  trade  unions  providing  unemployment  benefits. 
One  million  two  hundred  and  fifty-four  thousand  pounds  was  ex- 
pended on  unemployed  benefits  in  that  year,  an  average  of  one  pound 
and  fifteen  shillings  per  member;  Insurance  versus  Poverty,  pp.  315-7. 


Ill]  CONTEMPORARY  ENGLISH  THEORIES  1 1 1 

of  view  such  public  aid  is  advocated,  for  it  is  contended 
that  only  when  the  state  feels  the  financial  pressure  of  un- 
employment will  preventive  steps  (such  as  the  regulariza- 
tion  of  expenditures)  be  taken.  As  an  abstract  matter  of 
justice,  Gibbon  holds,  public  assistance  should  be  given. 
Unemployment  is  characteristic  of  present  social  and  in- 
dustrial organization;  it  is  a  community,  not  an  individual 
matter,  and  therefore  the  community  should  aid  in  the 
bearing  of  the  burden.^ 

A  dissenting  opinion  on  this  subject  is  advanced  by  S.  J. 
Chapman,  of  the  University  of  Manchester.  Holding  that 
the  personal  equation  would  "  undermine  the  actuarial 
bases  "  of  insurance,  that  the  chance  of  fraud  would  be  too 
great,  and  that  the  subsidizing  of  trade-union  insurance 
would  necessitate  the  state  upholding  trade-union  policies 
and  standards.  Professor  Chapman  maintains  that  any  form 
of  insurance  in  which  the  government  attempts  to  take  a 
part  is  inadvisable.  Only  that  insurance  against  unemploy- 
ment which  is  wholly  provided  and  administered  by  the 
trade  unions  themselves  is  considered  practicable.^ 

The  limits  of  this  paper  would  be  exceeded  by  a  full  dis- 
cussion of  the  different  types  of  unemployment  insurance 
which  have  been  practised  or  proposed.  As  to  the  relative 
merits  of  the  two  general  types,  voluntary  and  compulsory, 
and  the  various  species  of  each,  there  has  been  much  dis- 
cussion. An  autonomous  voluntary  scheme,  that  is,  one 
established  and  maintained  by  the  workmen  themselves, 
was  the  only  type  prevailing  in  England  previous  to  the  pas- 
sage of  the  National  Insurance  Act.  That  act  provided 
compulsory  insurance  within  certain  trades,  contributions 
to  be  made  by  employers,  employees  and  the  state,  and  re- 

1  Cf.  Gibbon,  Unemployment  Insurance,  pp.  229-30,  for  a  summary 
of  reasons  advanced  for  public  aid. 

'^  Brassey  and  Chapman,  Work  and  Wages  (London,  1908),  pt.  ii, 
"Wages  and  Employment,"  pp.  325-36. 


1 12  CONTEMPORARY  THEORIES  OF  UNEMPLOYMENT  [112 

enforced  the  voluntary  schemes  by  providing  governmental 
subsidies.  The  latter  method  of  subsidizing  autonomous 
schemes  is  the  well-known  Ghent  plan.  Admittedly  an  ex- 
periment, the  English  system  is  thus  affording  an  oppor- 
tunity for  the  trial  of  two  directly  opposite  types  of  insur- 
ance. The  outcome  of  the  trial  will  undoubtedly  shape 
future  policy  beyond  as  well  as  within  the  British  Isles.^ 

^  I.  G.  Gibbon  comes  out  unreservedly  in  favor  of  the  Ghent  system 
of  subsidies — of  "helping  self-help."  Comprehensive  descriptions  of 
the  continental  methods  of  insurance  are  included. 

The  minority  of  the  Poor  Law  Commission  strongly  recommended  a 
similar  form  of  subsidizing  trade  unions  paying  out-of-work  benefits 
(pt.  ii,  pp.  288-93). 

The  majority,  while  making  no  specific  recommendations,  urge  that 
in  any  form  adopted  the  existing  trade  organizations  be  utilized; 
Royal  Commission  on  the  Poor  Lazvs,  pt.  vi,  ch.  4. 

Public  subventions  for  supplementing  the  benefits  of  trade  associa- 
tions are  also  recommended  by  David  F.  Schloss  {Insurance  Against 
Unemployment,  London,  1909),  whose  book  contains  a  summarized 
description  of  all  existing  methods. 

An  ardent  advocate  of  compulsion,  as  the  only  method  of  helping 
those  who  most  need  it,  and  a  strong  supporter  of  the  Act  of  191 1,  is 
found  in  Mr.  Chiozza  Money,  to  whose  book  reference  has  been  made 
(Insurance  versus  Poverty).  It  contains  the  text  of  the  National  In- 
surance Act,  with  full  explanations. 

A  brief  symposium  of  views  on  the  subject,  with  particular  refer- 
ence to  the  Act  of  191 1,  is  included  in  the  Revue  Internationale  du  Cho- 
mage  (Paris,  191 1),  pp.  127-152.  I.  G.  Gibbon,  J.  A.  Hobson,  and 
Rowntree  and  Lasker  contribute  notes. 

The  Report  of  the  Special  Committee  on  Unskilled  Labor  (London, 
1908)  points  out  the  absolute  necessity  of  an  efficient  labor-exchange 
system  for  the  success  of  unemployment  insurance  schemes.  The  com- 
mittee recommend  no  particular  plan,  because  a  national  system  of 
labor  exchanges  was  not  in  sight  at  that  time  (pp.  66-77). 

Cyril  Jackson,  who  investigated  unemployment  for  the  Royal  Com- 
mission on  the  Poor  Laws,  publishes  his  personal  views  in  Unemploy- 
ment and  Trade  Unions  (London,  1910).  His  conclusion  concerning 
insurance  is  expressed  in  no  uncertain  words:  "A  subsidy  to  trade 
unions  is  therefore  not  only  the  easiest  but  also  the  sole  effective 
method  of  unemployment  insurance"  (p.  39).  The  central  thesis  of 
his  book  is  that  the  solution  of  the  problem  of  unemployment  is  to  be 
found  only  through  governmental  co-operation  with  trade  unions 
{cf.  p.  85). 


113]  CONTEMPORAR  Y  ENGLISH  THEORIES  i j  3 

10.    THE   RELIEF   OF  THE   UNEMPLOYED 

Before  a  national  insurance  act,  universal  in  scope,  can 
be  worked  out  there  will  be  actual  destitution  due  to  unem- 
ployment to  be  faced ;  even  though  such  a  universal  measure 
be  applied,  there  will  always  remain  some  whom  it  cannot 
reach.  So  relief  of  more  direct  character  is  immediately 
necessary  and  will  probably  always  be  needed.  The  various 
recommendations  concerning  the  character  which  such  re- 
lief should  take  in  the  future  will  be  briefly  enumerated.^ 

The  Report  of  the  Poor  Law  Commission  contains  a  com- 
prehensive set  of  suggestions  dealing  with  the  able-bodied 
unemployed.  Three  principles  which  are  to  dictate  action 
on  their  behalf  are  laid  down.  They  are  co-operation  (be- 
tween all  agencies  dealing  with  the  unemployed),  discrimi- 
nation (between  unemployed  individuals),  and  restoration.* 
The  proposed  mechanism  of  relief  is  as  follows : 

Any  individual  who  cannot  be  immediately  helped 
through  the  labor  exchanges  and  who  has  no  unemployment 
insurance  benefit  accruing  will  be  first  assisted,  if  possible, 
by  voluntary  aid  organizations.  The  commission  suggests 
these  voluntary  committees  as  a  means  of  mobilizing  local 
personal  service  and  fully  utilizing  privately  subscribed 
funds.  ^  These  will  give  the  temporary  assistance  to  man 
and  family  which  is  often  all  that  is  required  for  tiding  over 
brief  spells  of  idleness.  Behind  this  voluntary  body  will 
stand  the  public  assistance  authority.  Those  appealing  to 
this  body  will  be  classified  on  the  basis  of  their  physical 
condition,  technical  training  and  industrial  record.    Those 

^  Relief  measures  now  taken  under  the  Poor  Laws  and  under  the 
Unemployed  Workman  Act  were  sketched  above  (pp.  26-31,  31-36). 

'  Report  of  the  Royal  Commission  on  the  Poor  Laws,  pt.  vi,  ch.  4. 

'  For  a  full  description  of  these  committees,  which  make  up  am  im- 
portant part  of  their  proposed  machinery  for  charitable  relief,  see  the 
Commission's  Report,  pt  vii. 


1 14  CONTEMPORARY  THEORIES  OF  UNEMPLOYMENT  [114 

whose  condition  and  character  are  such  that  they  require 
merely  temporary  maintenance  will  be  given  either  assist- 
ance at  home  in  return  for  daily  work,  partial  home  assist- 
ance, the  man,  but  not  his  family,  being  kept  in  an  institu- 
tion, or  full  institutional  assistance,  both  man  and  family 
being  helped  at  an  industrial  or  agricultural  institution. 
The  second  class  consists  of  those  who  would  not  be  helped 
by  merely  temporary  assistance,  but  require  a  prolonged 
period  of  training.  For  these  persons,  whose  restoration 
to  industrial  efficiency  is  sought,  industrial  and  agricultural 
institutions  and  labor  colonies  similar  to  the  best  of  those 
which  have  been  tried  in  the  past  would  be  provided.  The 
third  class  specified  by  the  majority  are  those  "  unemploy- 
ables  "  who  require  detention  and  discipline.  The  Poor 
Law  Commission's  recommendations  concerning  their  treat- 
ment have  been  outlined.^ 

This  constitutes  their  complete  permanent  program. 
However,  pending  the  full  development  of  the  measures 
suggested,  the  prosecution  of  public  works  by  the  local 
authorities,  financially  assisted  by  the  board  of  trade,  is  rec- 
ommended for  periods  of  acute  distress.^ 

One  of  the  vital  points  connected  with  the  program  of 
the  majority  is  that  all  those  who  receive  assistance,  other 
than  medical,  for  three  months  or  more  during  the  qualify- 
ing year  are  to  be  disfranchised.^  To  this  the  minority 
take  strong  exception. 

"  Maintenance  under  Training "  is  the  caption  under 
which  the  minority  advance  their  relief  recommendations. 
Their  plan  of  treatment  is  based  upon  the  belief  that  "  the 
capacity  of  the  industrial  system  to  absorb  fresh  labor  is 

^  Cf.  supra,  pp.  27,  28. 

'  A  full  statement  of  the  views  of  the  majority  is  given  in  the  Report 
of  the  Royal  Commission  on  the  Poor  Laws,  pt.  vi,  ch.  4  and  pt.  ix. 
*  Ibid.,  pt.  vi,  ch.  4. 


115]  CONTEMPORARY  ENGLISH  THEORIES  ^  TT^- 

far  from  exhausted,  but  this  capacity  depends  entirely  upon 
the  labor  being  .  .  .  suited  to  the  particular  developments 
of  the  time."  ^  To  bring  about  the  industrial  regeneration 
necessary  for  many  of  the  unemployed,  a  system  of  free 
training  establishment  and  of  detention  training  colo- 
nies is  advocated,  the  former  designed  only  for  men  who 
can  be  made  fit  to  resume  their  places  in  industrial  employ- 
ment, the  latter  for  the  **  work-shy."  -  Admission  to  the 
free  establishments  is  to  be  optional  with  any  unemployed 
man,  but  public  assistance  of  any  kind  will  only  be  given  to 
the  families  of  such  able-bodied  men  as  do  attend.  The 
curriculum  would  include  strict  physical  training  and  the 
complete  industrial  overhauling  of  each  individual  ad- 
mitted. If  in  an  outworn  trade  he  would  be  taught  other 
work;  if  a  poor  workman  in  a  flourishing  trade,  the  train- 
ing given  him  would  be  designed  to  make  him  an  efficient 
workman  in  that  trade.  Maintenance  for  each  man  and  his 
family  would  be  provided  out  of  the  public  funds  during 
this  period  of  training.  By  close  co-operation  with  the 
national  labor  bureau  each  man  would  be  placed  as  soon 
as  opportunity  offered  and  the  degree  of  his  efficiency  justi- 
fied it.' 

Relief  works  for  the  unemployed,  that  is,  the  carrying-on 
of  public  works  on  which  they  can  be  employed,  are  con- 
demned by  the  minority  as  over-costly,  degenerating  in  the 
effects  on  the  individual,  and  as  *'  representing  only  a  coun- 
sel of  despair." 

The  outstanding  point  of  difference  between  the  majority 
and  minority  proposals  in  this  regard  is  that  the  latter  rest 
upon  the  fundamental  belief  that  all  work  with  the  able- 

"^  Minority  Report,  pt.  ii,  p.  300  (quoted). 

2  Cf.  supra,  p.  27. 

'  Minority  Report,  pt.  ii,  pp.  293-308. 


1 1 6  CONTEMPORARY  THEORIES  OF  UNEMPLOYMENT  [i  i6 

bodied  should  be  taken  completely  away  from  the  poor-law 
authorities  and  placed  under  a  ministry  of  labor.  It  is  an 
administrative  proposal  of  far-reaching  importance,  but 
apparently  one  which  is  not  to  be  acted  upon  by  Parliament. 

An  inconspicuous  provision  in  the  National  Insurance 
Act  may  pave  the  way  for  important  future  advances  in  the 
training  of  inefficients.  Article  lOO  states  that  if  an  insur- 
ance officer  considers  that  the  skill  or  knowledge  of  a  work- 
man is  defective,  but  that  these  defects  may  be  remedied 
by  technical  instruction,  he  may  "  pay  out  of  the  unemploy- 
ment fund  all  or  any  of  the  expenses  incidental  to  the  pro- 
vision of  the  instruction,  if  he  is  of  opinion  that  the  charge 
on  the  unemployment  fund  in  respect  of  this  workman  is 
likely  to  be  decreased  by  the  provision  of  the  instruction." 
What  may  be  done  in  the  future  under  the  provision  of 
this  article  is  uncertain,  but  the  possibilities  are  striking. 

Beveridge  touches  very  briefly  on  the  relief  which  should 
be  accorded  the  unemployed.  That  such  relief  should 
be  administered  under  the  poor  law,  that  the  line  between 
industry  and  relief  should  be  sharply  drawn,  and  that 
it  should  aim  at  the  restoration  to  physical  vigor  and  tech- 
nical skill  of  those  capable  of  it,  he  makes  clear,  however.^ 

*  Beveridge,  Unemployment,  pp.  232-4. 

For  interesting  accounts  of  labor  colonies,  see  three  articles  in  Papers 
and  Proceedings,  National  Conference  on  the  Prevention  of  Destitu- 
tion (London,  1911),  pp.  482-493,  499-509- 

J.  A.  Hobson  discusses  labor  colonies  and  similar  institutions  in  The 
Problem  of  the  Unemployed,  pp.  i3i-45-  He  considers  such  attempts 
to  be  very  far  from  a  real  solution  of  the  problem  at  issue,  though 
of  possible  value  in  a  small  way. 

Professor  Chapman  weighs  the  relative  advantages  of  labor  colonies 
and  relief  works  for  unemployed  men  in  Work  and  Wages,  pt.  ii,  pp. 
33<5-43,  372-84. 

A  general  conclusion  in  favor  of  restorative  training  is  reached  by 
Pigou  in  his  chapter  on  the  "  Relief  of  the  Unemployed ;"  Unemploy- 
ment, pp.  228-41. 

A  chapter  on  the  "  Public  Provision  of  Work,"  which  is  valuable  be- 


117]  CONTEMPORARY  ENGLISH  THEORIES  fl/" 

The  chief  methods  recommended  for  caring  for  men 
while  unemployed  have  been  touched  upon  in  this  section 
and  throughout  the  paper.  To  detail  at  greater  length  sim- 
ilar recommendations,  of  which  there  are  many,  is  unneces- 
sary. What  is  aimed  at  in  them  all  is  the  maintenance  of 
families  in  good  health  while  the  wage-earner  is  idle,  the 
prevention  of  demoralization,  and,  if  possible,  the  industrial 
regeneration  of  those  needing  it  and  capable  of  such  res- 
toration. Such  relief  measures,  combined  with  deeper- 
going  reforms  which  aim  to  organize  English  industrial 
life,  may  well  furnish  the  basis  for  a  scientific  campaign 
looking  toward  the  elimination  of  the  distress  which  has  in 
the  past  accompanied  unemployment  and  under-employment. 

cause  of  the  detailed  local  statistics  given,  is  contained  in  Chapman 
and  Hallsworth,  Unemployment  in  Lancashire,  pp.  115-33. 

Edmond  Kelly's,  The  Unemployables,  which  was  referred  to  above,  is 
exclusively  devoted  to  the  treatment  of  labor  colonies  as  agencies  for 
the  training  and  regeneration  of  unemployed  men  of  the  lower  types. 


/ 


CHAPTER  III 

The  Development  of  American  Unemployment 
Theory  and  Remedial  Practice 

I.  miscellaneous  types  of  early  theory 

^i>/  Intensive  study  of  the  problem  of  unemployment  is  a 
/  ^  very  recent  development  in  the  United  States.  Severe  un- 
employment there  was  at  various  times  during  the  latter 
half  of  the  nineteenth  century,  and  the  problem  of  vagrancy 
has  been  virtually  a  permanent  one  since  the  Civil  War. 
Though  these  conditions  called  forth  nothing  approaching 
a  scientific  analysis,  the  spectacle  of  large  numbers  of  able- 
bodied  men  out  of  work  during  periods  of  industrial  in- 
activity did  cause  brief  flurries  of  excitement,  characterized 
by  generalizations  of  hobby-ridden  individuals  as  to  the 
causes  of  the  phenomenon,  and  by  appeals  for  immediate 
remedies  essentially  of  a  superficial  character.  The  former 
constitute  a  considerable  portion  of  the  early  American 
literature  on  the  subject. 

A  striking  example  of  this  early  type  of  theory  is  the 
"  Labor  Exchange "  idea,  which  was  rather  extensively 
circulated  from  1890  to  1898.  ,  Believing  that  iinemploy- 
ment  and  the  like  ills  that  beset  the  world  were  the  result 
of  the  use  of  a  metallic  exchange  medium  which  was  scarce 
and  hard  to  obtain,  certain  individuals  formed  a  "  National 
Labor  Exchange  "  at  Independence,  Missouri,  in  1890.  It 
was  designed  to  afford  work  for  all  by  enabling  everybody 
to  exchange  directly  the  things  he  produced  for  the  things 
he  n&eded.  Labor,  represented  by  a^paper  currency,-  was  to 
118  '^' -    "  [11^ 


1 19]  AMERICAN  UNEMPLOYMENT  THEORY  i ^9  _ 

bejhe  medium  of  exchange.  It  was  amiounced  in  1897  that 
300  branches  with  a  total  membership  of  15,000  had  been 
set  up.  The  movement  apparently  died  shortly  afterward, 
however,  for  no  trace  of  it  appears  after  1898.^ 

Similar  in  some  respects  is  the  conclusion  reached  by 
Hugo  Bilgram,  who  asserts,  after  an  involved  argument, 
that  business  stagnation  and  involuntary  idleness  can  be 
prevented  by  the  issue  of  credit  money." 

As  early  as  1871  Henry  George  was  attacking  land 
monopolization  in  California.^  In  1878,  lecturing  on  Why 
Work  is  Scarce,  Wages  Low,  and  Labor  Restless,^  he 
specifically  named  the  monopoly  of  land  as  the  cause  of 
unemployment,  and  advocated  the  single  tax  as  a  method 
of  relief.  He  takes  occasion  at  the  same  time  to  deny  that 
the  influx  of  Chinese,  to  which  unemployment  was  popu^ 
larly  attributed,  was  the  root  cause  of  the  lack  of  work. 
In  Progress  and  Poverty,^  his  theory  is  outlined  at  length. 
The  Malthusian  doctrine  of  a  tendency  toward  a  surplus 
population  is  repudiated,®  George  asserting  that  productive 

1  Information  concerning  this  interesting  movement  is  contained  in : 
The  Labor  Exchange  Quarterly,  July  1896,  vol.  i,  no.  i  (Independence, 
'Mo.)  ;  G.  B.  DeBernardi,  Trials  and  Triumphs  of  Labor  (Independ- 
ence, Mo.,  1896) ;  J.  A.  Kinghorn- Jones,  How  We  May  Dispose  of 
Our  Surplus  Products  and  How  We  May  Employ  Our  Surplus  Labor 
(San  Francisco,  1898) ;  B.  J.  Sharp,  Labor  Exchange  in  a  Nutshell 
(Salem,  Oregon,  1897)  ;  E.  Z.  Ernst,  The  Progressive  Handbook  of 
the  Labor  Exchange  (Olathe,  Kansas,  1894). 

'  Hugo  Bilgram,  Involuntary  Idleness  (Philadelphia,  1889).  Mr.  Bil- 
gram's  book  is  an  elaboration  of  a  paper  presented  to  the  American 
Economic  Association. 

'  Henry  George,  Our  Land  and  Land  Policy,  National  and  State  (San 
Francisco,  1871). 

*  Lecture  delivered  in  Metropolitan  Temple,  S.  R,  March  26,   1878. 
Pamphlet  printed  for  the  Land  Reform  League. 
'  (San  Francisco,  1879.) 
Ibid.,  bk.  ii,  "  Population  and  Subsistence,"  pp.  81-136. 


I20  CONTEMPORARY  THEORIES  OF  UNEMPLOYMENT  [120 

forces  can  keep  pace  with  population.  *'.  .  .  in  any  given 
stage  of  civilization  a  greater  number  of  people  can  produce 
a  larger  proportionate  amount  of  wealth  and  more  fully 
supply  their  wants  than  can  a  smaller  number."  ^  The 
single  tax  and  the  accompanying  reforms  which  are  to 
remedy  the  "  unequal  distribution  of  wealth  based  on  the 
institution  of  private  property  in  land  "  are  fully  explained 
in  this  later  work. 

The  second  type  of  literature  concerned  with  the  problem 
of  unemployment,  previous  to  the  introduction  of  the  more 
intensive  methods  of  study  of  recent  years,  is  that  coming 
from  men  personally  in  touch  with  the  unemployed.  On 
the  purely  descriptive  side  there  is  such  work  as  Josiah 

/^  Flynt  Willard's  realistic  narratives  of  American  tramp 
life,^  and  W.  A.  Wyckoff's  portrayal  of  a  winter  among^ 
the  unemployed  of  Chicago.^     More  critical  in  their  nature 

"  are  the  contributions  of  those  writing  from  the  point  of 
view  of  charity  administration.  John  Graham  Brooks  gives 
us  one  of  the  earliest  papers  on  the  imemployed  written 
from  this  standpoint.*  He  states  frankly  that  he  ".  .  .  . 
cannot  think  it  of  prime  importance  to  search  for  the  causes 
of  poverty  and  want  of  work,"  and  confines  his  treatment 
largely  to  an  exposition  of  the  necessity  of  a  change  in  the 
form  of  charity  and  a  discussion  of  certain  proposed 
methods  of  dealing  with  the  unemployed.  Four  measures 
are  suggested:  emplo)mient  bureaus,  graded  work  tests, 
/  trade  schools  for  giving  skill  and  capacity  to  the  incom- 
\  petent,    and   compulsory    farm   colonies    and   work-shops. 

1  Henry  George,  op.  cit.,  p.  134. 

2  Josiah  Flynt,  Tramping  with  Tramps  (N.  Y.,  1901). 

»W.  A.  Wyckoff,  The  Workers— The  West  (N.  Y.,  1898),  pp.  1-146. 

*  Annals  of  the  American  Arademy  of  Political  and  Social  Science, 
"  The  Future  Problem  of  Charity  and  the  Unemployed,"  July  1894,  PP. 
1-27. 


121  ]  AMERICAN  UNEMPLOYMENT  THEORY         ^  12F 

Certain  of  these,  it  will  be  noted,  are  the  remedies  proposed 
today.  But  Brooks'  analysis  of  the  problem  to  be  met, 
though  he  states  that  he  is  not  searching  for  causes,  is  fun- 
damentally different  from  that  of  modern  students.  He  is 
reasoning  throughout  from  the  individual,  finding  the  cause 
essentially  in  the  individual  and  in  the  individual' sj^tbiree  J 
great  passions — the  sexual,  gaming,  and  drink. "|  This  ap- 
pears unmistakably  when  he  states  that  "  This  dead-beat 
crowd  by  any  test  that  we  apply  to  it  is  our  greatest 
plague."  ^  The  point  is  emphasized  here  because  it  is  char- 
acteristic of  all  the  earlier  approaches  to  the  study  of  this 
question.* 

The  same  point  of  view  is  apparent  in  another  early 
study,  though  a  somewhat  deeper  analysis  is  made  in 
this  paper.  J.  J.  McCook,  speaking  on  *'  The  Tramp.  i*i:Qb- 
lem^^  explains  its  development  in  this  way:  When  an  in- 
dustrial slump  occurs,  the  young  unmarried  men,  usually 
those  a  trifle  irregular  because  of  tendencies  toward  drink-  \ 
ing,  are  first  turned  out  by  the  employers.  In  seeking  work.  .^ 
elsewhere,  a  taste  of  wandering  life  is  experienced.  When 
times  become  better  these  men  have  become  accustomed  to 
the  life  of  the  vagrant  and  will  not  return  to  industry. 
Severe  laws,  which  leave  the  fundamental  problem  un- 
touched, may  scatter  them  but  do  not  regenerate  them. 
The  remedies  are  to  be  found  in  the  prohibition  of  heavy 
drinking,  measures  to  prevent  people  from  discovering  that 
they  can  live  without  work,  the  passage  and  enforcement  \ 
oi  good  laws,  the  "  abolition  of  industrial  booms,  financial 

crises,  business  slumps,  and  hard  times,"  the  encouragement 

J 

1  Annals  of  the  American  Academy  of  Political  and  Social  Science, 

op.  cit.,  p.  25.  ^^ 

2  Cf.  supra,  p.  22  et  seq.  "    *'■"■ 
^Proceedings  of  the  National  Conference  on  Charities  and  Correc- 
tions, Twenty-second  Annual  Session,  1895,  pp.  288-301. 


( 


122  CONTEMPORARY  THEORIES  OF  UNEMPLOYMENT  [122 

of  marriage,  the  prevention  of  train- jumping,  and  the  estab- 
lishment of  reformatory  institutions, 

"  The  man  who  does  not  desire  to  work,  who  prefers  to 
eat  his  bread  in  the  sweat  of  some  other  man's  brow,"  is 
the  subject  of  a  paper  by  Washington  Gladden,  who  so 
defines  the  "  Workless  Man."  ^  An  adequate  work  test  is 
looked  upon  by  Gladden  as  the  essence  of  the  correct  rem- 
edy. Once  having  established  this  work  test,  four  other 
measures  are  proposed:  Workhouses  are  needed  in  the 
cities  and  farm  colonies  in  the  country ;  training  in  the  arts 
of  industry  should  be  included  in  early  education;  tem- 
porary employment  for  the  industrial  and  capable  among 
the  unemployed  should  be  provided  by  the  state;  breeding 
by  paupers  should  be  made  impossible. 

Somewhat  later  in  point  of  time  and  characterized  by 
relief  proposals  somewhat  broader  in  their  scope,  but  with 
the  same  emphasis  on  individual  fault,  is  Edward  T.  De- 
vine's  analysis  in  Principles  of  Relief.^  Speaking  of  able- 
bodied  men  applying  for  assistance,  he  says :  "  Lack  of 
employment,  which,  at  the  time  of  application,  is  given  in 
the  great  majority  of  instances  as  the  reason  for  being  in 
need,  is  usually  found,  on  inquiry,  to  be  due  to  some  per- 
sonal deficiency  in  the  employee.  He  has  been  discharged 
for  intemperance,  for  inefficiency,  for  inability  to  meet  the 
demand  upon  him,  or  for  some  objectionable  trait."  *  De- 
vine  does  state  that  in  a  certain  proportion  of  instances  the 
lack  of  employment  is  due  to  industrial  causes,  of  which  he 
enumerates  ".  .  .  the  introduction  of  machinery,  changes 
in  methods  of  industry,  a  f alling-off  in  the  demand  for  par- 
ticular commodities,  disturbances  of  credit,  and  the  .  .  .  sub- 


^   Z'     1  Washington  Gladden,  "  What  to  Do  with  the  W 
/^'   (     ceedings  of   the  National   Conference   on   Charitie 


Workless  Man,"  Pro- 
ties  and  Corrections, 
V.JTwenty-six  Annual  Session,  1899,  pp.  141-152. 

'(N.  Y.,  1904.)  ^Ibid.,  p.  151. 


123]  AMERICAN  UNEMPLOYMENT  THEORY  123  " 

stitution  of  new  management  in  a  particular  industry.  .  ." 
Five  possible  measures  of  assistance  are  mentioned  by  De- 
vine.  They  are  the  use  of  employment  agencies  and  news- 
paper advertisements,  direct  appeal  to  possible  employers  of 
labor  and  co-operation  with  the  trade  union,  the  creation  of 
industrial  colonies  or  industries  in  which  those  who  cannot 
be  placed  in  regular  employment  may  become  self-support- 
ing, the  use  of  temporary  industries,  such  as  woodyards, 
and  the  giving  of  duly  safeguarded  material  relief.^  x\n- 
other  measure,  a  varied  manual  training  in  youth,  is  men- 
tioned incidentally  as  a  means  for  enabling  workers  to  meet 
enforced  industrial  changes  with  less  suffering. 

In  considering  Devine's  reasoning  and  his  recommenda- 
tions, as  well  as  those  of  others  engaged  in  charity  work, 
the  fact  must  be  borne  in  mind  that  they  are  speaking,  in 
the  main,  of  a  particular  class  of  the  unemployed,  those 
who  apply  for  relief  at  charity  headquarters.  Neverthe- 
less, a  statement  such  as  the  following  links  up  this  analysis 
with  those  others  in  which  the  problem  of  unemployment  is 
an  individual  problem.  "  The  first  principle  to  be  recog- 
nized is  that  the  obligation  to  find  employment,  like  the 
obligation  to  continue  suitable  employment  when  one  has  it, 
rests  primarily  upon  the  applicant  himself."  " 

The  works  summarized  above,  which  represent  the  opin- 
ions of  the  ablest  of  those  connected  with  charity  adminis- 

1  Devine,  op.  cit.,  p.  161. 

^Ibid.,  p.  152.  Reference  is  made  below  to  later  works  by  Devine. 
A  very  obvious  shift  of  emphasis  from  the  individual  to  society  and 
industry  as  basic  sources  of  unemployment  and  vagrancy  will  be  noted. 

Another  study  of  vagrancy,  comprehensive,  but  emphasizing  individual 
faults  essentially,  and  looking  primarily  to  the  taboo,  to  repressive 
legislation  as  the  remedy,  appears  in  the  Annals  of  the  American 
Academy  of  Political  and  Social  Science  (May  1904),  vol.  xxxiii,  no.  3, 
pp.  37-48.  Benjamin  €.  Marsh,  "Causes  of  Vagrancy  and  Methods 
of  Eradication." 


124  CONTEMPORARY  THEORIES  OF  UNEMPLOYMENT  [124. 

tration  a  decade  or  more  ago,  will  serve  to  depict  the  gen- 
eral views  of  this  class  of  workers.  From  them  we  turn  to 
a  brief  review  of  work  done  in  another  field,  that  of  theory/ 

2.    THE  EARLY  AMERICAN  ECONOMISTS  ON  UNEMPLOYMENT 

The  absence  of  an  intensive  analysis  of  unemployment 
which  characterized  the  two  types  of  writers  mentioned 
above  is  also  notable  in  the  works  of  the  early  American 
economists.  The  Malthusian  doctrine  of  a  surplus  popula- 
tion is  a  bone  of  controversy;  the  relation  of  the  mobility 
and  adaptability  of  labor  to  wages  is  considered ;  the  effect 
of  the  introduction  of  machinery  on  the  number  of  men  em- 
ployed is  referred  to;  but  unemployment  as  a  distinct  prob- 
lem is  not  studied.  Certain  points  of  value  to  the  present 
study  are  made,  however,  by  some  of  these  earlier  thinkers. 

The  works  of  H.  C.  Carey  contain  a  suggestive  treatment 
of  certain  of  the  general  factors  involved  in  the  problem 
being  considered.  Malthus'  contention  that  population 
can  outstrip  the  means  of  subsistence,  and  that  unemploy- 
ment and  misery  are  results  of  this  tendency,  is  opposed  on 
two  different  grounds.  In  the  first  place,  man's  productive 
powers  are  held  to  be  indefinitely  extensible  with  the  devel- 
opment of  civilization.  "  With  every  increase  in  the  ex- 
tent to  which  matter  has  taken  upon  itself  the  form  of  man, 
there  should  consequently  be  found  an  increase  of  his  power 
to  guide  and  direct  the  forces  provided  for  his  use  .  .  . 
and  constant  increase  in  his  power  to  command  the  food 
and  clothing  required  for  his  support."  ^     Secondly,  the  re- 

^  Note  should  be  made  of  an  additional  piece  of  early  material  bear- 
ing on  the  subject  of  unemployment.  The  First  Annual  Report  of  the 
United  States  Commissioner  of  Labor  (1886)  on  "Industrial  Depres- 
sion "  contains  a  recommendation  for  the  restriction  of  immigration  as 
a  preventive  of  unemployment  (pp.  271-3). 

^  H.  C.  Carey,  Principles  of  Social  Science  (Philadelphia,  1858-9),  vol. 
i,  p.  89. 


125]  AMERICAN  UNEMPLOYMENT  THEORY  lai^ 

productive  power  in  man  is  not  a  constant  quantity.  There 
is  a  "  self-supporting  law  of  population  "  which  "  secures 
harmony  in  the  growth  of  numbers  and  of  food."  Man's 
reproductive  power  "...  diminishes  as  his  various  facul- 
ties are  more  and  more  stimulated  into  action — as  employ- 
ments become  diversified — as  the  societary  action  becomes 
more  rapid — as  land  becomes  divided — and  as  he  himself 
becomes  more  free."  ^ 

Another  point  made  by  Carey  in  his  exposition  of  the 
essential  harmonies  of  social  life  is  that  with  the  develop- 
ment of  civilization  the  '*  continuity  of  societary  motion  " 
increases.  The  "  unceasing  waste  of  labor,"  which  is  one 
of  the  conditions  of  early  society  and  a  scattered  people,  is 
replaced,  with  the  growth  of  wealth  and  population,  by  an 
equal  distribution  of  employment  throughout  the  year.^ 
This  thesis,  which  is  of  extreme  importance  to  the  question 
of  unemployment,  is  elaborated  at  some  length.  The  "asso- 
ciation of  mankind,"  a  "diversity  of  employments,"  a  vari- 
ety of  commodities  produced,  a  growing  complexity  in  the 
life  of  man  and  in  the  combinations  among  men,  a  "  rapid- 
ity of  circulation,"  all  these  are  essential  to  the  promotion 
of  that  continuity  in  the  motion  of  society  which  is  held  to 
be  the  supreme  test  of  civiHzation.  And  Carey  believed 
that  these  harmonies  were  being  worked  out,  that  the  early 
"  gambling  character  of  the  labor  of  the  fields  "  and  all  the 
other  discontinuities  which  characterize  a  low  stage  of  de- 
velopment were  disappearing.^ 

In  his  American  Political  Economy*  Francis  Bowen  sets 

1  H.  €.  Carey,  op.  cit,,  vol.  iii,  p.  308.  Cf.  vol.  iii,  chs.  46  and  47,  pp. 
263-327,  for  a  full  exposition  of  Carey's  views  on  population. 

2  Ibid.,  vol.  iii,  p.  28. 

'  For  a  development  of  this  interesting  theory  at  length,  cf.  Principles 
of  Social  Science,  vol.  ii,  ch.  20,  pp.  17-42;  vol.  iii,  ch.  38-44,  pp.  17-232. 
*  (New  York,  1890.) 


126  CONTEMPORARY  THEORIES  OF  UNEMPLOYMENT  [126 

forth,  in  the  main,  the  stock  statements  of  the  classical 
economists  on  the  questions  concerned  with  unemplo5rment. 
Adam  Smith's  assertion  that  high  wages  compensate  for 
irregularity  of  employment  is  repeated/  Senior's  exposi- 
tion of  the  difficulty  of  the  transfer  of  labor  from  one 
occupation  to  another,  which  is  "  the  principal  evil  of  a 
high  state  of  civilization,"  is  quoted.^  As  to  the  effects  of 
the  introduction  of  machinery,  Bowen  sides  with  Ricardo's 
critics  in  asserting  that  ordinarily  the  ultimate  demand,  be- 
cause of  the  resultant  cheapened  production,  will  be  suffi- 
cient to  cause  the  absorption  of  all  who  are  temporarily 
thrown  out  of  work.  If  the  demand  for  a  commodity  be 
limited  by  natural  causes,  however,  "  any  improvement 
which  will  diminish  the  labor  required  for  its  production 
must  permanently  deprive  some  laborers  of  employment."  * 
With  Carey,  Bowen  repudiates  the  Malthusian  theory  of 
population.  He  sets  forward  "  two  great  facts  which 
afford  a  complete  refutation  of  Malthusianism.  The  first 
is  that  the  limit  of  population,  in  any  country  whatsoever, 
is  not  the  nimiber  of  people  which  the  soil  of  that  country 
alone  will  supply  with  food,  but  the  number  which  the  sur- 
face of  the  whole  earth  is  capable  of  feeding;  and  it  is  a 
matter  of  demonstration  that  this  limit  cannot  even  be 
approached  for  many  centuries."  *  The  second  fact  is  that 
"  the  practical  or  actual  limit  to  the  growth  of  population, 
in  every  case,  is  the  limit  to  the  increase  and  distribution, 
not  of  food,  but  of  wealth."  ^  And  that  the  increase  of 
population  is  attended  by  a  more  than  proportionate  in- 
crease of  wealth  is  held,  for  "  every  human  being  is  an 
implement  for  the  production  of  wealth.'* 

^American  Political  Economy  (New  York,  1890),  pp.  192-3. 
2  Ibid.,  pp.  200-2.  8  Ibid.,  p.  54. 

*  Ibid.,  p.  140.  5  Jbid.,  p.  140. 


127]  AMERICAN  UNEMPLOYMENT  THEORY  i^ _ 

Francis  A.  Walker  in  his  treatment  of  wages  de- 
velops a  theory  bearing  immediately  upon  the  subject  of 
unemployment.  The  essential  immobility  and  lack  of  adap- 
tability of  labor,  factors  which  prevent  perfect  competition 
for  the  product  of  industry,  are  emphasized  in  both  his 
chief  works/  Not  only  is  labor  narrowly  restricted  geo- 
graphically, but  there  is  a  marked  slowness  of  occupational 
change.  Caimes's  theory  of  non-competing  groups  is  en- 
dorsed, except  in  his  contention  that  the  children  of  the 
work  classes  constitute  a  ''disposable  funds."  Walker  con- 
cludes that  "...  until  you  secure  mobility  of  adult  labor 
you  will  fail  to  find  it  in  the  rising  generation."  ^  In  his 
contention  that  mobility,  adaptability  and  guidance  of  the 
rising  generation  are  needed.  Walker  is  anticipating  later 
proposals  for  the  remedying  of  industrial  disorganization.^ 

3.    METHODS  OF  PRACTICAL  RELIEF 

The  -summarized  discussion  of  the  theories  of  the  three 
classes  of  thinkers  considered  above  is  intended  to  give  an 
idea  of  the  course  of  theoretical  reasoning  in  the  United 
States  on  the  question  of  unemployment.  The  review  of 
methods  of  practical  relief  need  not  be  lengthy. 

The  treatment  of  the  able-bodied  unemployed  during  the 
latter  part  of  the  nineteenth  century  and  the  first  decade  of 
the  twentieth  ran  about  the  same  general  course  as  did 
English  practice.*  For  homeless  men,  municipalities  and 
associated  charities  sometimes  provided  lodging-houses  with 
attached  woodyards  or  other  plants  for  the  enforcement  of 

»  Francis  A.  Walker,  Political  Economy  (N.  Y.,  1888)  ;  The  Wages 
Question  (N.  Y.,  1886). 

^  The  Wages  Question,  p.  203. 

'  C/.  Political  Economy,  pp.  260-6;  The  Wages  Question,  "The  Mo- 
bility of  Labor,"  ch.  11,  pp.  174-205. 

*  Cf.  supra,  pp.  22-31. 


128  CONTEMPORARY  THEORIES  OF  UNEMPLOYMENT  [128 

the  supremely  necessary  "  work  test."  ^  The  Salvation 
Army  and  the  Volunteers  of  America  have  established 
similar  institutions  in  the  large  cities,  in  some  cases  with  a 
work  test,  in  many  cases,  it  is  alleged,  without  such  a  test.^ 
At  times,  when  public  attention  had  been  sharply  called  to 
the  question  by  a  severe  winter,  an  acute  industrial  depres- 
sion, or  the  gathering  of  "  armies  "  of  the  unemployed  in 
the  urban  centers,  funds  were  raised  by  public  or  private 
action  and  temporary  employment  given.  Such  temporary 
works  usually  bore  the  same  sort  of  doubtful  fruit  as  similar 
English  works  had  done.^  Free  employment  bureaus  con- 
ducted by  philanthropic  institutions,  municipalities,  and  in 
some  few  instances  by  states,  were  established  at  various 
times  and  at  various  places  for  aiding  the  unemployed.  The 
comparative  lack  of  success  of  these  earlier  attempts  was  due 
to  several  causes,  of  which  inefficiency,  inadequate  appropria- 
tions, lack  of  co-operation,  and  failure  of  all  concerned  to 

^  A  fairly  comprehensive  description  of  the  treatment  of  the  able- 
bodied  by  charitable  institutions  is  contained  in  Charles  R.  Henderson^ 
Modern  Methods  of  Charity  (N.  Y.,  1904),  especially  pp.  395-6,  451-4, 
on  vagrants.  Cf.  also  Amos  G.  Warner,  American  Charities  (N.  Y., 
1908),  pp.  244-262,  much  more  modern  in  its  treatment.  E.  T.  Devine, 
Principles  of  Relief,  to  v^'-hich  reference  has  been  made,  contains  mate- 
rial on  this  subject,  cf.  ch.  iv,  pp.  412-31,  "Industrial  Distress  in  New- 
York  and  Indianapolis,  Winter  of  1893-4."  A  similar  discussion  of 
winter  relief  is  contained  in  the  Annals  of  the  American  Academy  of 
Political  and  Social  Science,  November  1894,  PP-  61-81.  Helena  S. 
Dudley  describes  the  relief  work  for  women  carried  on  in  the  Wells 
Memorial  Institute  at  Boston.  Descriptions  of  the  more  recent  work 
of  this  character  will  be  found  in  most  of  the  current  periodicals. 

'  Accounts  of  the  work  of  the  Salvation  Army  and  of  the  Volunteers 
of  America  are  given  in :  Monographs  on  American  Social  Economics, 
no.  20,  "  The  Social  Relief  Work  of  the  Salvation  Army  in  the  United 
States,"  by  Commander  Booth  Tucker,  1900;  Charles  R.  Henderson, 
Modern  Methods  of  Charity  (N.  Y.,  1904),  PP.  433-38;  United  States 
Bureau  of  Labor,  Bulletin  No.  48  (September,  1903),  "Farm  Colonies 
of  the  Salvation  Army." 

3  Cf.  supra,  pp.  25  et  seq. 


129]  AMERICAN  UNEMPLOYMENT  THEORY  129 

realize  their  true  function  are  outstanding.  Reference  will 
be  had  to  them  later/  )Several  farm  colonies  were  created 
by  voluntary  agencies,  and  in  {i  911  $10,000  was  appro- 
priated in  New  York  State  for  the  establishment  of  an  in- 
dustrial farm  colony.  But  the  public  employment  given 
was  rare  and  brief;  "Wayfarers  Lodges"  were  compara- 
tively few,  and  patronized  only  in  extremities  of  need  by 
men  out  of  work;  the  work  of  the  early  employment 
bureaus  was  virtually  insignificant.  The  characteristic 
treatment  has  been  to  leave  the  men  to  their  own  devices, 
and  to  the  police.j 

The  distinction  between  men  temporarily  out  of  work 
and  the  chronic  idlers,  which  was  urged  by  Mr.  Chamber- 
lain in  England  in  the  Circular  of  1886  and  which  was 
attempted  under  the  Unemployed  Workman  Act,  has  not 
been  made  in  practice  in  the  United  States.  It  is  approxi- 
mately correct  to  say  that  until  quite  recently  the  blanket 
terms  for  the  unemployed  of  this  country  have  been 
''  tramp  "  and  "  vagrant."  And  to  a  considerable  extent 
is  this  still  true  of  common  parlance,  for  every  migratory 
worker  is  a  "  tramp."  It  has  been  with  the  police,  more 
than  with  any  of  the  other  agencies  mentioned,  that  this 
class  has  had  its  dealings.  The  "  need  of  co-operation  with 
the  police  "  in  dealing  with  this  class  is  emphasized  by  C. 
R.  Henderson  in  Modern  Methods  of  Charity.  Tramp  and 
vagrancy  laws  have  applied  practically  indiscriminately  to 
all  who  had  "  no  visible  means  of  support,"  workers  and 
non-workers  alike.  A  brief  resume  of  these  laws  is  there- 
fore pertinent  to  the  present  discussion. 

*  For  descriptions  of  the  earlier  offices,  cf.  Monographs  on  American 
Social  Economics,  no.  6,  W.  F.  Willoughby,  "  Employment  Bureaus," 
(Boston,  1900) ;  Massachusetts  Bureau  of  Statistics  of  Labor,  34th 
Annual  Report  (Boston,  March,  1904),  pt.  ii,  pp.  131-213,  Free  Em- 
ployment Offices  in  the  United  States  and  Foreign  Countries;  United 
States  Bureau  of  Labor,  Bulletin  No.  68  (Jan.,  1907)  ;  J.  E.  Connor, 
Free  Public  Employment  Offices  in  the  United  States. 


130  CONTEMPORARY  THEORIES  OF  UNEMPLOYMENT  [130 

4.    TRAMP  AND  VAGRANCY  LEGISLATION  IN  THE  UNITED 

STATES  ^ 

There  are  eighteen  states  "  having  tramp  laws.  In  seven- 
teen of  the  states  ^  the  legislation  covers  persons  begging 
from  house  to  house  and  subsisting  on  charity;  in  nine* 
the  laws  apply  to  all  persons  "  roaming  about  without  vis- 
ible means  of  support " ;  in  five  states  ^  they  apply  to  per- 
sons "  wandering  about  without  a  fixed  residence  or  lawful 
occupation  " ;  the  laws  of  two  states  ®  include  persons  rid- 
ing on  trains  without  permission ;  those  of  two  states ' 
cover  persons  not  making  reasonable  efforts  to  secure  em- 
ployment ;  while  the  law  of  one  state  ^  applies  to  persons 
lodging  in  places  other  than  lodging-houses. 

No  minimum  sentence  is  prescribed  by  the  laws  of  eleven 
states;®  it  is  three  days  under  the  law  of  one  state;  ^^ 
thirty  days  in  three  states;  ^^  six  months  in  two  states,^ 
and  one  year  in  one  state. ^' 

*  The  material  on  tramp  and  vagrancy  legislation  included  in  this 
monograph  has  been  obtained  from  charts  compiled  by  W.  C.  Frank- 
hauser  and  Sidney  D.  Gamble,  which  constitute  a  digest  of  all  such 
legislation  prior  to  April  i,  1915.  Acknowledgment  of  indebtedness 
to  them  is  due. 

2  Maine,  New  Hampshire,  Vermont,  Massachusetts,  Connecticut, 
Rhode  Island,  New  York,  New  Jersey,  Pennsylvania,  Delaware,  Mary- 
land, North  Carolina,  Alabama,  Ohio,  Mississippi,  Nebraska,  Iowa,  In- 
diana. 

3  New  HampshirCj  Vermont,  Massachusetts,  Connecticut,  Rhode  Is- 
land, New  York,  New  Jersey,  Pennsylvania,  Maryland,  North  Caro- 
lina, Alabama,  Ohio,  Mississippi,  Nebraska,  Iowa,  Indiana,  Maine. 

*  Vermont,  Massachusetts,  Connecticut,  Rhode  Island,  New  York,. 
New  Jersey,  Delaware,  Maryland,  Iowa. 

^  Maine,  Pennsylvania,  Delaware,  Maryland,  Mississippi. 
•Vermont,  Massachusetts.      '  Nebraska,  Iowa.         ^  New  York. 

*  New  Hampshire,  Vermont,  Connecticut,  New  York,  Pennsylvania, 
Delaware,  North  Carolina,  Ohio,  Mississippi,  Iowa,  Indiana. 

^^  Nebraska.  "  Maine,  New  Jersey,  Maryland. 

"  Massachusetts,  Alabama.  "  Rhode  Island. 


131  ]  AMERICAN  UNEMPLOYMENT  THEORY  131 

A  maximum  sentence  is  not  specified  in  one  state ;  ^  it  is 
ten  days  in  one  state/  twenty  days  in  one  state,*  thirty 
days  in  three  states,*  six  months  in  three  states,^  ten  months 
in  one  state,®  one  year  in  four  states,^  fifteen  months  in 
one  state,®  two  years  in  one  state, '^  and  three  years  in  two 
states/'' 

Thirteen  states  ^^  set  no  fines;  one  state  ^^  prescribes  a 
minimum  fine  of  $3,  while  one  ^^  sets  a  minimum  fine  of 
$50.  A  maximum  fine  of  $20  is  set  by  the  laws  of  one 
state, ^*  of  $50  by  two  states,^*^  of  $100  by  one  state,^*  and 
of  $200  by  one  state/ ^ 

The  place  of  commitment  is  not  noted  in  the  laws  of  two 
states/®  In  one  state  ^^  commitment  to  the  penitentiary  at 
hard  labor  or  to  the  state  farm  is  provided  for,  while 
another  ^^  gives  the  alternative  of  the  penitentiary  or 
jail.     One  ^^  prescribes  the  jail  at  hard  labor,  while  two  ^^ 

*  Indiana.  '  Iowa.  ^  Nebraska. 

*  North  Carolina,  Delaware,  Mississippi. 
^  Vermont,  New  York,  New  Jersey. 

*  Maine, 

■^  Connecticut,  Maryland,  Pennsylvania,  Alabama. 

®  New  Hampshire.  ®  Massachusetts. 

i'^  Rhode  Island,  Ohio. 

"  Maine,  New  Hampshire,  Massachusetts,  Connecticut,  Rhode  Island, 
New  York,  New  Jersey,  Pennsylvania,  Delaware,  Maryland,  Ohio, 
Iowa,  Indiana. 

^^  Nebraska.  ^'  Alabama.  ^*  Nebraska. 

^^  Mississippi,  North  Carolina, 

^^  Vermont. 

^'^  Alabama. 

^^  Nebraska,  Indiana. 

19  New  York. 

'"Ohio. 

'1  Maine. 

*'  Alabama,  Iowa. 


132  CONTEMPORARY  THEORIES  OF  UNEMPLOYMENT  [132 

set  the  jail  or  hard  labor.  Three  ^  fix  the  jail,  three  ^  the 
workhouse,  while  one  ^  sets  either  the  workhouse  or  the 
jail.  One  state  *  provides  for  sentence  to  the  house  of  cor- 
rection, no  labor  being  specified,  while  another  ^  sets  the 
house  of  correction  at  hard  labor.  Another  state  ^  gives 
three  alternatives,  the  house  of  correction,  the  state  farm 
or  the  workhouse.  The  law  of  one  state  ^  provides  for  no 
commitment  whatsoever,  stating  that  tramps  shall  be  set  to 
work  on  the  streets  or  hired  out. 

On  the  matter  of  pay  there  is  again  variance.  Fourteen 
of  the  eighteen  states  having  tramp  laws  allot  no  pay  for 
work  done  by  such  offenders  when  imprisoned.  Of  those 
providing  that  tramps  set  to  work  shall  be  remunerated, 
one®  fixes  33^^  cents  a  day,  one^  $1.00  per  day,  one  ^^ 
$1.50  per  day,  while  one  ^^  prescribes  that  a  "  fair  wage  " 
shall  be  paid. 

This  sketch  of  the  character  of  tramp  laws  is  virtually 
duplicated  as  regards  the  almost  complete  lack  of  uniform- 
ity, the  varying  severity,  and  the  absence  of  discrimination, 
by  a  description  of  vagrancy  laws.  Up  to  April  i,  191 5, 
44  stated  y^  had  definite  vagrancy  laws,  those  without  such 
laws   applying  their   tramp   legislation   to  all   classes   of 

•  N€w  Hampshire,  North  Carolina,  Mississippi. 
'  Connecticut,  Rhode  Island,  New  Jersey. 

•  Pennsylvania.  *  Maryland.  ^  Vermont. 

•  Massachusetts.  "^  Delaware.  ®  Vermont. 

'  Nebraska.  ^^  Iowa.  "  Delaware. 

"  New  Hampshire,  Massachusetts,  Connecticut,  Rhode  Island,  New 
York,  New  Jersey,  Delaware,  Maryland,  North  Carolina,  Alabama, 
Ohio,  Mississippi,  Nebraska,  Iowa,  Virginia,  West  Virginia,  South 
Carolina,  Tennessee,  Georgia,  Florida,  Kentucky,  Michigan,  Wisconsin, 
Indiana,  Illinois,  Louisiana,  Arkansas,  Texas,  Oklahoma,  Missouri, 
Kansas,  Minnesota,  North  Dakota,  South  Dakota,  Wyoming,  Montana, 
Colorado,  Utah,  Nevada,  Washington,  Cahfornia^  Arizona,  New  Mex- 
ico, Idaho. 


133]  AMERICAN  UNEMPLOYMENT  THEORY  133 

vagrants.  The  applicability  of  these  laws  to  the  unem- 
ployed, especially  to  those  of  the  migratory  type,  is  shown 
by  the  fact  that  in  37  states  ^  they  apply  to  ''  those  who 
lack  the  means  of  support — who  are  able  to  work  but  re- 
fuse," in  17  states^  to  ''persons  lodging  in  places  other 
than  lodging-houses  without  permission,"  in  30  states  ^  to 
"  healthy  beggars  who  solicit  alms  as  a  business,"  and  in 
2y  states  *  to  "  suspicious  persons  strolling  about  without 
lawful  business."  While  such  definitions  appear  to  exclude 
the  legitimately  unemployed,  the  fact  that  both  the  apparent, 
external  line  of  cleavage  and  the  actual  line  of  cleavage 
between  the  vagrant,  the  tramp,  and  the  industrial  unem- 
ployed man  cannot  be  clearly  drawn  has  served  to  prevent 
such  exclusion  in  actual  practice. 

Sentences  prescribed  vary  from  a  minimum  of  one  day 
to  six  months,  and  from  a  maximum  of  ten  days  to  three 
years,  being  sixty  days  or  over  in  most  of  the  states  having 
such  laws.     Indeterminate  sentences  are  provided  for  by 

^  Massachusetts,  Connecticut,  Rhode  Island,  New  York,  Maryland, 
North  Carolina.  Alabama,  Ohio,  Mississippi,  Nebraska,  Iowa,  Virginia, 
South  Carolina,  Tennessee,  Georgia,  Florida,  Kentucky,  Michigan,  Wis- 
consin, Indiana,  Illinois,  Louisiana,  Arkansas,  Texas,  Oklahoma,  Mis- 
souri, North  Dakota,  South  Dakota,  Wyoming,  Montana,  Colorado, 
Idaho,  Nevada,  Washington,  Cahfornia,  Arizona,  Utah. 

'  Massachusetts,  Connecticut,  Rhode  Island,  New  York,  Maryland, 
Iowa,  Wisconsin,  Illinois,  Louisiana,  North  Dakota,  Montana,  Utah, 
Idaho,  Nevada,  Washington,  California,  Arizona. 

'  Connecticut,  Rhode  Island,  New  York,  Maryland,  North  Carolina, 

Alabama,  Ohio,  Mississippi,  Nebraska,  Iowa,  Virginia,  South  Carolina, 

Tennessee,   Georgia,    Florida,    Michigan,    Wisconsin,   Indiana,    Texas, 

Oklahoma,  Minnesota,  North  Dakota,  Montana,  Colorado,  Utah,  Idaho, 

Nevada,  Washington,  California,  Arizona. 

/     :  *.jbelaware.    North    Carolina,    Alabama,   Ohio,    Nebraska,    Virginia, 

South  Carolina,  Georgia,  Florida,  Kentucky,  Michigan,  Wisconsin,  Illi- 

/       nois,  Arkansas,   Texas,  Oklahoma,   Missouri,  Kansas,   North  Dakota, 

\       South  Dakota,   Montana,  Colorado,  Utah,  Idaho,  Nevada,  California, 

Arizona.  -  "'       ^ 


134  CONTEMPORARY  THEORIES  OF  UNEMPLOYMENT  [134 

the  laws  of  two  states/  The  place  and  character  of  com- 
mitment vary,  as  they  do  under  the  tramp  laws,  between 
penitentiary,  jail  and  workhouse.  The  laws  of  fourteen 
states  ^  provide  specifically  for  outdoor  labor  on  the  streets, 
in  some  cases  in  chain  gangs.  That  of  one  state  *  allows 
two  days'  credit  on  the  prison  term  for  each  day's  work. 
As  has  been  noted,  New  York  has  established  a  state  farm, 
to  which  vagrants  as  well  as  tramps  may  be  sent  for  inde- 
terminate periods.  Of  the  fourteen  state  laws  prescribing 
outdoor  labor,  nine*  provide  for  payment  for  such  labor, 
the  amount  varying  from  75  cents  per  day  to  $2.00  per 
day.  In  two  states  ^  one-half  of  the  proceeds  of  their 
labor  is  given  to  the  men  at  outside  work. 

In  the  foregoing  summaries  no  attempt  has  been  made 
to  give  a  compendium  of  the  various  tramp  and  vagrancy 
laws,  nor  to  note  the  specific  laws  of  particular  states. 
They  are  meant  to  show  the  general  type  of  treatment  to 
which  the  "  workless  man  "  was  often  exposed,  and  to  in- 
dicate the  general  theories  lying  back  of  these  laws.  The 
legitimacy  of  the  application  of  this  type  of  legislation  to 
the  criminal  tramp  and  the  worst  type  of  vagrant  is  not 
here  questioned,  though  there  is  room  for  doubt  as  to 
their  effectiveness  even  in  this  field.  The  significant  point 
is  that  to  the  ordinary  peace  officer  and  petty  judge, 
as  to  the  ordinary  person,  the  unemployed  man,  especially 
if  a  migratory  worker  of  the  type  very  common  in  the 

*  New  York,  Georgia 

'  Georgia,  Illinois,  Arkansas,  North  Dakota,  Colorado,  Nevada,  Cali- 
fornia, Arizona,  New  Mexico,  Ohio,  Kentucky,  Wyoming,  Iowa,  Wash- 
ington. 

*  Nevada. 

(J)Oh\o,  Kentucky,  Arkansas,  Wyoming,  Illinois,  Colorado,  California, 
Iowa,  Washington. 

*  Iowa,  Washington. 


135]  AMERICAN  UNEMPLOYMENT  THEORY  135 

United  States,  has  been  a  tramp  or  a  vagrant.  Dis- 
crimination was,  and  to  a  great  extent  still  is,  lacking  in 
the  treatment  of  these  two  classes.  Laws  such  as  that  of 
Rhode  Island,  allowing  $5.00  per  conviction  to  peace  offi- 
cers arresting  tramps,  intensify  the  evil  effects  of  such  lack 
of  discrimination  by  putting  premiums  upon  the  arrest  of 
homeless  men.  The  "floating"  policy,  the  forced  moving-on 
of  all  non-residents,  which  has  been  characteristic  of  an- 
other type  of  police  solution  of  the  problem  of  the  migra- 
tory man  is  in  strict  accord  with,  and  is  in  fact  an  out- 
growth of,  the  theories  inherent  in  this  law  making. 

This  tramp  and  vagrancy  legislation,  this  police  control, 
has  constituted  perhaps  a  major  part  of  the  field  of  practice 
in  the  treatment  of  the  unemployed.  The  above  discussion 
of  it,  as  a  counterpart  to  the  development  of  the  types  of 
theoretical  reasoning  touched  upon,  will  help  to  show  what 
has  been  the  groundwork  of  the  modern  American  theories 
concerned  with  unemployment  and  the  unemployed  man. 

Brief  reference  has  been  made  to  the  earlier  attempts  to 
establish  public  employment  bureaus  in  the  United  States.^ 
Later  developments,  notably  in  regard  to  action  by  the 
various  states,  have  been  far  more  promising,  not  only  in 
that  laws  providing  for  such  bureaus  have  been  enacted, 
but  in  the  comprehensive  character  of  the  employment-office 
systems  thus  established  in  certain  of  the  states.  At  the 
present  time  ^  twenty-four  states  have  laws  providing  for 
the  organization  of  the  labor  market  by  means  of  central- 
ized state  employment-agency  systems.*     In  addition,  one 

1  Supra,  p.  128. 

2  April  1917. 

'The  states  having  such  laws,  with  the  years  of  their  enactment,  are 
as  follows:  Arkansas,  1917;  California,  1915;  Colorado,  1907;  Connec- 
ticut, 1905;  Illinois,  1915;  Indiana,  1909;  towa,  1915;  Kansas,  1901; 
Kentucky,  1906;  Maryland,  1916;  Massachusetts,  1906;  Michigan,  1905; 


136  CONTEMPORARY  THEORIES  OF  UNEMPLOYMENT  [136 

state  ^  authorizes  municipalities  to  set  up  public  bureaus, 
another  ^  encourages  municipalities  to  take  such  action, 
and  a  third  ^  requires  them  to  do  so.  In  the  sphere  of  fed- 
eral action  the  attempt  of  the  Division  of  Information  of 
the  United  States  Bureau  of  Immigration  to  provide  ma- 
chinery for  the  same  purpose  is  promising.  This  subject 
is  briefly  discussed  below  in  connection  with  the  immigra- 
tion question.* 

While  these  state  systems  are  as  yet  inadequate,  and 
although  uniformity  and  full  interstate  co-operation  have 
not  as  yet  been  achieved,  the  spread  of  the  movement 
toward  a  more  efficient  distribution  of  labor  marks  the 
coming  of  a  truer  conception  of  the  nature  of  the  problem 
of  unemployment. 

We  have  considered  types  of  the  men  of  one  idea  who 
attempted  to  solve  the  problem  of  unemployment.  That 
anything  of  value  to  a  solution  of  the  problem  was  con- 
tributed by  them  is  doubtful,  though  the  force  of  Henry- 
George's  thought  is  not  yet  spent.  Wyckoff  and  Flynt,  in- 
vestigators of  reality,  gave  American  society  that  closer 
and  more  intimate  view  of  the  "  submerged  tenth  "  which 
Charles  Booth  had  given  contemporary  England.  The 
charity  administrators,  the  individual  with  all  his  faults 
bulking    large    in    their    view,    tended    to    overlook    the 

Minnesota,  1905;  Missouri,  1899;  Nebraska,  1897;  New  Jersey,  1915; 
New  York,  1914;  Ohio,  1890;  Oklahoma,  1908;  Pennsylvania,  1915; 
Rhode  Island,  1908;  South  Dakota,  1913;  West  Virginia,  1901 ;  Wis- 
consin, 1901.  Thanks  are  due  to  Dr.  John  B.  Andrews,  secretary  of  tlie 
American  Association  for  Labor  Legislation,  for  the  list  of  these  laws. 

^  Montana. 

^  Louisiana. 

» Idaho. 

*  Cf.  infra,  pp.  155,  156.  Cf.  also  John  R.  Commons  and  John  B.  An- 
drews, Principles  of  Labor  Legislation,  "Federal  Activity"  (N.  Y., 
1916),  pp.  276-8, 


137]  AMERICAN  UNEMPLOYMENT  THEORY  137 

dominant  industrial  factors.  Yet  value  their  work  has  had, 
and  the  modern  program  for  the  prevention  of  unemploy- 
ment contains  measures  recommended  years  ago  by  men 
with  this  training.  Similarly,  though  the  American  econo- 
mists did  not  isolate  for  separate  study  the  problem  being 
reviewed,  and  do  not,  of  course,  give  us  a  complete  analysis 
of  the  question  as  it  is  presented  today,  certain  of  the  con- 
clusions they  reached  appear  on  that  same  program.  From 
charity  practice,  public  and  voluntary,  something  has  been 
learned.  The  place  of  police  power  in  the  treatment  of  the 
unemployed,  the  possibilities  of  repressive  legislation,  have 
been  indicated  by  the  outcome  of  such  legislation.  But  a 
synthesis  of  methods  and  a  concentration  of  attention  on 
the  specific  problem  of  unemployment  were  needed  for  a 
more  perfect  analysis.  A  beginning  in  that  study  has  been 
made. 


CHAPTER  IV 

Contemporary  American  Theories  of  Unemployment 
AND  OF  Unemployment  Relief 

I.  general  statement 

As  a  whole,  the  contributions  made  by  American  stu- 
dents to  the  study  of  unemployment  lack  the  concreteness, 
the  fullness,  and  the  general  applicability  characteristic  of 
four  or  five  of  the  standard  English  works.  There  is  no 
standard  American  work.  There  is  no  one  authority  con- 
taining a  general  description  of  conditions  in  the  country 
as  a  whole,  an  analysis  of  such  statistics  and  other  infor- 
mation as  we  have,  a  full  treatment  of  causes,  a  description 
of  remedies  and  their  applicability  to  the  United  States, 
and  an  outline  of  the  all-important  administrative  ma- 
chinery needed.^  There  are  governmental  commission 
reports  touching  the  subject  of  unemployment.  There 
are  local  reports  by  various  state  and  city  commissions,  re- 
stricted in  scope  and  with  but  a  limited  circulation.  There 
are  fragmentary  statistics,^  published  by  federal  and  state 
bodies  and  by  a  few  other  groups,  partially  summarized  by 
occasional  individuals.  Popular  magazine  articles  and  edi- 
torials innumerable  have  appeared  within  the  last  five  years. 
The  iniquities  of  the  private  employment-agency  system 
and  the  necessity  for  public  offices  have  been  themes  for  a 

1 A  notable  contribution  in  this  last  field  is  made  in  John  R. 
Commons  and  John  B.  Andrews,  Principles  of  Labor  Legislation  (N. 
Y.,  1916),  ch.  ix,  "Administration." 

2  A  note  concerning  American  unemployment  statistics  is  made  at 
the  end  of  this  monograph. 

138  C138 


139]  CONTEMPORARY  AMERICAN  THEORIES  139 

mass  of  writing.  Other  literature  there  has  been  on  the 
tramp,  the  vagrant  and  the  migratory  worker,  most  of  it 
characterized  by  a  failure  to  link  up  these  elements  with 
the  main  problem.  Industrial  education,  vocational  train- 
ing and  occupational  guidance  have  received  varying 
amounts  of  space,  in  some  cases  as  phases  of  the  unemploy- 
ment problem,  more  often  as  separate  subjects.  Land 
monopoly  and  immigration  have  been  featured  as  causes  of 
unemployment.  Conventions  have  been  held,  and  various 
of  the  more  serious  journals  have  given  space  to  fairly 
comprehensive  discussions  of  the  problem.  Finally,  there 
has  been  propaganda  designed  to  stimulate  effective  reme- 
dial work  along  correct  lines.  But,  except  in  a  very  limited 
degree  and  in  condensed  form  in  certain  of  the  reports, 
books,  periodical  articles  and  propaganda  literature,  there 
has  been  no  synthesis  of  the  subject,  no  full  consideration 
by  any  one  authority  of  the  causes,  conditions  and  possible 
remedies  for  unemployment  as  it  faces  the  people  of  the 
United  States  today. 

To  review  in  detail  the  various  theories  as  to  the  causes 
of  unemployment  and  the  remedies  for  unemployment 
which  appear  in  this  variegated  literature  would  constitute 
in  large  part  a  mere  repetition  of  the  first  part  of  this  paper 
which  traced  the  various  opinions  held  by  English  writers. 
The  repetition  would  be  not  only  one  of  form,  but  largely 
one  of  fact  also.  The  analysis  of  the  problem  which  has 
been  sketched  above  has,  in  all  its  essentials,  been  accepted 
by  American  students  of  unemployment.^    Additional  fac- 

1  The  first  comprehensive  account  of  the  problem  of  unemployment 
to  appear  in  the  United  States  was  the  Report  to  the  Legislature  of  the 
State  of  New  York  by  the  Commission  Appointed  .  .  .  to  inquire  into 
the  Matter  of  Employers'  Liability  and  Other  Matters,  Third  Report, 
Unemployment  and  Lack  of  Farm  Labor  (Albany,  1911).  This  report, 
largely  the  work  of  William  M.  Leiserson,  appeared  two  years  after 
the  first  edition  of  Wm.  H,  Beveridge*s  classic,   Unemployment  —  A 


I40  CONTEMPORARY  THEORIES  OF  UNEMPLOYMENT  [140 

tors  there  are  which  enter  into  the  situation  as  the  United 
States  faces  it,  and  original  work  along  certain  lines  has 
been  and  is  being  done  in  this  country.  But  in  its  broad 
outlines  the  problem  is  the  same  and  the  analysis  of  it  is 
the  same. 

The  study  of  the  problem  made  by  William  M.  Leiserson 
corresponds  closely  to  the  approach  outlined  in  the  first 
part  of  this  paper.  His  first,  and  what  is  to  date  his  full- 
est exposition  of  the  question  appears  in  the  Report  on  Un- 
employment and  Lack  of  Farm  Labor,  published  in  191 1 
by  the  New  York  Commission  on  Employers'  Liability. 
Though  the  investigation  was  confined  to  New  York  State 
the  findings  have  a  wider  bearing.  The  proposed  remedies, 
being  recommendations  for  immediate  legislation,  are  nec- 
essarily more  restricted  than  more  general  suggestions 
would  be.  They  include  a  system  of  public  employment 
offices,  the  publication  of  a  labor-market  bulletin,  the  occu- 
pational direction  of  juveniles,  and  the  manipulation  of 
public  work  so  as  to  regularize  employment  opportunities.^ 
His  latest  contribution,  an  article  on  "  The  Problem  of 
Unemployment  Today,"  ^  though  briefer,  is  wider  in  its 
scope  and  contains  the  results  of  more  recent  work.  He  con- 
tends that  unemployment  is  not  an  insoluble  problem,  that 

Problem  of  Industry,  and  follows  closely  the  lines  laid  down  by  Bev- 
eridge. 

(Note  should  be  made  of  the  treatment  of  the  problem  by  the 
United  States  Industrial  Commission,  Final  Report,  1902,  pp.  74^3* 
Most  of  the  factors  at  present  held  to  account  for  unemployment  are 
enumerated,  but  the  omission  of  several  of  thoise  fundamental  in  the 
analysis,  and  the  failure  to  present  the  case  with  the  logical  clearness 
characterizing  Leiserson's  presentation  of  the  situation  in  New  York 
justify  the  statement  that  the  latter  was  the  first  American  analysis 
along  acceptedly  sound  lines.) 

1  N.  Y.  Commission  on  Employers'  Liability,  etc.,  Report  on  Unem- 
ployment and  Lack  of  Farm  Labor,  pp.  65-9. 

^Political  Science  Quarterly,  March  1916  (vol.  31.  no.  i),  pp.  1-24. 


141  ]  CONTEMPORARY  AMERICAN  THEORIES  141 

it  is  a  result  of  maladjustment,  that  it  is  not  personal  but 
economic,  that  there  is  no  over-population,  no  absolute^ 
surplus  of  labor,  but  a  fluctuating  industrial  reserve  force 
which  is  "  only  relatively  superfluous."  It  follows  from 
this  that  labor-saving  machinery  and  improved  processes 
cannot  create  a  surplus  labor  force ;  they  merely  make  more 
difficult  the  problem  of  adjusting  supply  to  demand.  The 
imemployed  man  is  therefore  "  an  industrial  factor,  not  a 
parasite  upon  industry."  ".  .  .  .  to  adjust  these  fluctua- 
tions, to  distribute  labor  more  evenly  over  the  country,  and 
in  better  proportions  among  the  occupations,  to  equalize 
the  amount  of  work  among  the  seasons  and  the  years," 
"  to  secure  a  more  perfect  adjustment  of  particular  forms 
of  labor  to  specific  demands  " — this  is  "  the  essence  of  the 
problem."  ^  These  ends  are  to  be  achieved  by  "a  con- 
nected network  of  public  employment  bureaus,"  by  guiding 
the  entrance  of  children  and  immigrants  into  the  labor 
market,  through  regularizing  the  labor  demand  by  shifting 
necessary  public  work  to  periods  of  depression,  by  a  de- 
casualization  process,  through  "  positive  efforts  of  employ- 
ers to  regularize  employment,"  and  by  means  of  insurance 
against  the  "  inevitable  unemployment  risk."  * 

The  United  States  Industrial  Commission  in  its  Final 
Report y  printed  in  1902,^  gives  an  analysis  approximating 
present-day  conclusions  more  closely  than  do  other  writings 
of  that  date.  Personal,  climatic  and  industrial  causes  are 
specified;  immigration*  is  named  as  a  cause  contributing 
to  the  seasonal  concentration  of  employment ;  "  the  work- 

*  Political  Science  Quarterly,  op.  cit.,  pp.  14-21. 
^  Ibid.,  pp.  16-20. 

'  United  States  Industrial  Commission,  Final  Report  (vol.  19  of  the 
Commission's  Reports)   (Washington,  1902),  pp.  746-763. 

*  Cf.  infra,  pp.  146-156,  for  a  treatment  of  the  relation  of  immigra- 
tion to  unemployment. 


142  CONTEMPORARY  THEORIES  OF  UNEMPLOYMENT  [142 

man's  ignorance  of  the  labor  market "  is  considered  to  be 
an  important  element  in  the  situation.  The  remedying  of 
this  latter  condition  by  the  development  of  the  labor-agency 
system  is  the  only  specific  recommendation  made  on  this 
subject/ 

The  most  pretentious  of  the  publications  of  individuals 
on  the  question  is  Frances  A.  Kellor's  Out  of  Work — A 
Study  of  Unemployment.^  A  revision  of  an  earlier  work  ^ 
concerned  primarily  with  the  evils  of  the  private  employ- 
ment agency  system,  the  later  book  is  designed  to  describe 
the  present  unemployment  situation  and  the  remedial  meas- 
ures which  have  been  undertaken  or  proposed.  A  broad 
field  is  covered,  and  a  considerable  body  of  information 
concerning  conditions,  attempted  remedies,  and  the  details 
of  various  programs  for  the  future  is  set  forth  without  a 
marked  degree  of  organization.  A  great  part  of  the  book 
is  devoted  to  a  discussion  of  the  organization  of  the  labor 
market.  The  diagnosis  by  Miss  Kellor  is  virtually  that  of 
the  English  students  and  need  not  be  detailed.  The  book 
is  referred  to  later  in  connection  with  the  treatment  of  sev- 
eral peculiarly  American  problems. 

Approaching  the  subject  from  the  field  of  insurance  I. 
M.  Rubinow  analyzes  the  problem  in  the  same  way,  em- 
phasizing the  same  general  factors.'*  As  to  a  solution, 
Rubinow  believes  that  the  only  remedy  is  to  be  found 
through  an  averaging  of  wages,  and  that  this  can  only  be 
done  by  means  of  "  compulsory,  subsidized  unemployment 
insurance."  ^ 

^  United  States  Industrial  Commission,  Final  Report,  pp.  757-61. 

2  (New  York,  1915.)    • 

»  F.  A.  Kellor,  Out  of  Work  (New  York,  1905). 

^  I.  M.  Rubinow,  Social  Insurance  (New  York,  1913),  ch.  26,  "The 
Problem  of  Unemployment,"  pp.  441-455. 

5  Ibid.,  pp.  455-79.  Rubinow's  discussion  of  unemployment-insurance 
systems  is  a  valuable  addition  to  the  material  on  that  subject 


143]  CONTEMPORARY  AMERICAN  THEORIES  143 

Isaac  A.  Hourwich  ^  points  to  the  same  causes  of  sea- 
sonal and  cyclical  variations,  absence  of  mobility,  and  the_ 
building-up  of  labor  reserves.     The  contention  that  unem- 
polyment  is  the  result  of  over-population  is  classed  by  Hour- 
wich as  fallacious. 

The  United  States  Commission  on  Industrial  Relations  ^ 
gives  "  two  basic  causes  of  unemployment — unjust  distri- 
bution of  income  and  land  monopolization,"  and  additional 
minor  causes  corresponding  to  those  which  have  been 
named.  The  former  causes  are  mentioned  above.  ^  Em- 
phasis has  been  placed  throughout  by  Leiserson  and 
others  of  the  Commission  staff  who  worked  on  unemploy- 
ment, upon  the  necessity  of  organizing  the  labor  market,* 
which,  as  we  have  seen,  is  Beveridge's  key  to  the  solution 
of  the  problem. 

To  detail  the  findings  of  other  bodies  as  to  the  general 
causes  of  unemployment  and  the  general  methods  of  relief 
would  entail  mere  repetition.  The  Report  of  the  Chicago 
Municipal  Markets  Commission,^  the  Report  of  the  Mayor's 
Commission  on  Unemployment  (Chicago),^  the  report  to 

^  Isaac  A.  Hourwich,  Immigration  and  Labor  (N.  Y.,  1912),  pp.  114- 
125. 

'  United  States  Commission  on  Industrial  Relations,  Final  Report 
(Washington,  1915),  pp.  33-38,  156-182,  255-275. 

3  Pp.  119,  120. 

*  United  States  Commission  on  Industrial  Relations,  Final  Report, 
pp.  170-182.  Cf.  also:  United  States  Commission  on  Industrial  Rela- 
tions, Tentative  Proposals  for  Consideration  on  the  Question  of  Public 
and  Private  Employment  OfUces  (Washington,  1914)  ;  United  States 
Commission  on  Industrial  Relations,  First  Annual  Report  (Washing- 
ton, 1914),  pp.  55-57. 

^Report  to  the  Mayor  and  the  Aldermen  by  the  Chicago  Municipal 
Markets  Commission  on  A  Practical  Plan  for  Relieving  Destitution 
and  Unemployment  in  the  City  of  Chicago  (Chicago,  1914). 

6  (Chicago,  1914.) 


144  CONTEMPORARY  THEORIES  OF  UNEMPLOYMENT  [144 

the  Commonwealth  Club  of  California  on  Unemployment ,^ 
the  Report  on  Unemployment  by  the  Commission  of  Im- 
migration and  Housing  of  California,^  the  Forty-sixth  An- 
nual Report  on  the  Statistics  of  Labor  of  Massachusetts  ^ 
fix  the  same  broad  causes,  with  certain  additional  points  of 
emphasis  to  be  noted  later,  and  propose  the  same  basic 
methods  of  relief.  Henry  R.  Seager,*  Edward  T.  Devine, 
in  his  later  works,^  John  R.  Commons,^  Charles  R.  Hen- 
derson '^  agree  on  the  essentials  of  the  same  analysis. 
Scott  Nearing  *  and  Jacob  Hollander  ^  have  voiced  the 
cry  that  remedial  maladjustment  is  the  cause  of  unemploy- 
ment. Alice  Solenberger/^  in  her  study  of  homeless  wan- 
derers, sensed  the  basic  industrial  fault  lying  at  the  root  of 
the  human  problem  she  tried  to  solve. 

Notable,  also,  have  been  the  series  of  articles  appearing 
in  the  Annals  of  the  American  Academy  of  Political  and 

^  Transactions  of  the  Commonwealth  Club  of  California  (vol.  9,  no. 
13 )»  Unemployment  (San  Francisco,  1914). 

^  Commission  of  Immigration  and  Housing  of  California,  Report  on 
Unemployment  (Supplement  to  First  Annual  Report)  (Sacramento, 
1914). 

'  (Boston,  1915),  pt.  ii,  pp.  24-31. 

*  Henry  R.  Seager,  Social  Insurance  (New  York,  1910),  pp.  84-114. 
Cf.  also  Seager's  letter  to  Devine  in  Report  on  the  Desirability  of 
Establishing  an  Employment  Bureau  in  the  City  of  New  York  (New- 
York,  1909),  pp.  86-89. 

^Misery  and  its  Causes  (New  York,  1913),  pp.  11-14,  1 15-146;  Report 
on  tJie  Desirability  of  Establishing  an  Employment  Bureau  in  the  City 
of  New  York. 

^  Labor  and  Administration  (New  York,  1913),  pp.  358-381. 

^Report  of  the  Mayor's  Commission  on  Unemployment  (Chicago, 
1914).  Cf.  also  "The  Struggle  Against  Unemployment,"  American 
Labor  Legislation  Review,  May  1914  (vol.  iv,  no.  2),  pp.  294-299. 

^Social  Adjustment  (New  York,  1911),  pp.  266-284;  Social  Religion 
(New  York,  1913),  PP-  124-137,  211. 

•  The  Abolition  of  Poverty  (New  York,  1914). 

^^  One  Thousand  Homeless  Men  (New  York,  1911). 


145]  CONTEMPORARY  AMERICAN  THEORIES  145 

Social  Science.  Various  of  their  issues  ^  have  dealt  with 
phases  of  the  unemployment  problem,  and  material  of  ex-^ 
ceptional  value  on  the  subject  has  been  contributed.  Out- 
standing in  the  contemporary  field  of  practical  work  toward 
a  solution  of  the  pressing  question  of  unemployment  have 
been  the  American  Association  for  Labor  Legislation  and 
its  subsidiary  body,  the  American  Section  of  the  Inter- 
national Association  on  Unemployment.  Under  the  aus- 
pices of  these  organizations  two  national  conferences  on 
unemployment  have  been  held,  intensive  investigations 
prosecuted,  a  national  survey  of  methods  of  unemployment 
relief  conducted,  and  propaganda  looking  toward  an  intel- 
ligent meeting  of  the  problem  carried  on.^  The  character 
of  the  relief  measures  detailed  in  their  propaganda  litera- 
ture—  the  establishment  of  public  employment  exchanges 
by  means  of  which  entrants  to  industry  may  be  guided, 
seasonal  industries  dovetailed,  and  casual  labor  decasual- 
ized; the  systematic  distribution  of  public  work;  the  reg- 
ularization  of  industry  by  employers,  workers  and  con- 
sumers ;  unemployment  insurance — indicate  how  closely  the 
analysis  of  unemployment  made  by  these  bodies  corres- 
ponds to  that  outlined  in  the  first  part  of  this  monograph. 

Apart,  however,  from  the  main  factors  in  the  situation, 
which  are  considered  to  be  universally  the  same,  there  are 

1  Cf.  especially:  vol.  ZZ,  no.  i,  January  1909,  "  Industrial  Education"; 
vol.  2)3,  no.  2,  March  1909,  "Labor  and  Wages";  vol.  59,  May  1915, 
"The  American  Industrial  Opportunity,"  pp.  104-21 1;  vol.  61,  Septera- 
l>er  19 1 5,  "America's  Interests  after  the  European  War." 

^  The  "  Proceedings  of  the  First  National  Conference  on  Unemploy- 
ment" appear  in  The  American  Labor  Legislation  Review,  May  1914 
(vol.  iv,  no.  2).  The  "Proceedings  of  the  Second  National  Confer- 
ence on  Unemployment,"  together  with  reports  of  investigators,  are  in 
The  American  Labor  Legislation  Review,  June  1915  (vol.  v,  no.  2). 
The  "Unemployment  Survey"  is  in  The  American  Labor  Legislation 
Review,  November  1915  (vol.  v,  no.  3). 


146  CONTEMPORARY  THEORIES  OF  UNEMPLOYMENT  [146 

certain  conditions  peculiar  to  the  American  problem  of  un- 
employment. Two  of  these,  the  problem  of  immigration 
and  that  of  the  migratory  element,  are  important  factors 
in  the  situation  in  the  United  States.  The  outstanding  fea- 
tures of  each  of  these  problems  in  their  relation  to  unem- 
ployment will  be  briefly  considered. 

2.    THE  RELATION  OF  IMMIGRATION  TO  UNEMPLOYMENT 

The  flood  of  immigration  to  the  United  States  has  been 
increasing  annually  in  volume  beyond  all  precedents  of 
similar  population  movements  in  the  world's  history.  Dur- 
ing the  year  ending  June  30th,  1914,^  1,218,480  immigrant 
aliens  were  admitted  to  the  United  States.  During  the 
twenty-year  period  from  1895  to  19 14,  14,750,738  immi- 
grants came  to  this  country.  Previous  to  the  year  1896  the 
proportion  of  immigrants  coming  from  northern  and  west- 
ern Europe  far  exceeded  that  from  southern  and  eastern 
Europe.  The  tide  changed  in  that  year,  the  number  of 
Italians,  Poles,  Hebrews,  Greeks,  Russians  and  others  of 
the  latter  group  swelling  enormously  with  each  passing 
year.  During  the  decade  from  1901  to  19 10,  21.8%  of  the 
total  number  of  immigrants  were  from  northern  and  west- 
ern Europe,  while  71.9%  came  from  southern  and  eastern 
Europe.  The  character  of  the  recent  immigrants  is  indi- 
cated also  by  the  occupational  division.  Of  the  1,214,480 
immigrants  for  the  year  ending  June  30th,  1914,  14,601 
were  of  the  professional  class,  173,208  of  the  skilled  classes, 
320,215  professed  no  occupation,  while  658,869  were  vir- 

*  Since  the  beginning  of  the  European  War,  immigration  has,  of 
course,  fallen  far  below  this  figure.  What  the  course  of  future  immi- 
gration will  be  is  an  unsettled  question.  The  statistical  data  are  from 
the  reports  of  the  Commissioner  General  of  Immigration  and  from  the 
Statistical  'Review  of  Immigration  compiled  by  the  United  States  Im- 
migration Commission  (vol.  iii  of  that  Commission's  Reports), 


147]  CONTEMPORARY  AMERICAN  THEORIES  i^y 

tually  unskilled,  though  a  considerable  part  of  these  are 
classed  as  farm  laborers/ 

This  influx  has  given  rise  to  many  new  problems,  and  to 
the  intensification  of  many  old  ones.  Its  effect  on  the  labor 
market  is  apparently  so  obvious  that  for  years  it  has  been 
maintained  by  many  persons  that  immigration  is  the  basic 
cause  of  unemployment.  That  it  is  at  least  an  important 
contributing  factor  is  the  opinion  of  the  United  States  Im- 
migration Commission,  an  opinion  submitted  on  the  basis 
of  a  most  comprehensive  survey  of  the  general  question  of 
immigration.  "  Their  (the  recent  immigrant  population) 
numbers  are  so  great,"  concludes  the  Commission,  "  and 
the  influx  is  so  continuous  that  even  with  the  remarkable 
expansion  of  industry  during  the  past  few  years  there  has 
been  created  an  over-supply  of  unskilled  labor,  and  in  some 
of  the  industries  this  is  reflected  in  a  curtailed  number  of 
working  days,  and  a  consequent  yearly  income  among  the 
unskilled  workers  which  is  very  much  less  than  is  indicated 
by  the  daily  wage  rates  paid."  "  This  "  over-supply  of  un- 
skilled labor  in  the  industries  of  the  country  as  a  whole  " 
is  held  to  be  "  a  condition  which  demands  legislation  re- 
stricting the  further  admission  of  such  unskilled  labor." 
The  same  conclusion  is  reached  by  the  Commission's  inves- 
tigators of  immigrants  in  industries.^  "  The  entrance  into 
the  operating  forces  of  American  industries  of  .  .  .  large 
numbers  of  wage-earners  of  the  races  of  Southern  and 
Eastern  Europe  .  .  .  has  led  to  the  voluntary  or  involun- 
tary displacement  from  certain  occupations  and  industries 
of  the  native  American  and  older  immigrant  employees."  * 

*  An  additional  51,587  are  put  in  a  miscellaneous  group. 

'  United  States  Immigration  Commission,  Reports  (Washington, 
1911),  vol.  i,  p.  39. 

'  W.  Jett  Lauck  was  the  expert  in  charge  of  these  field  investigations, 
and  the  conclusions  represent  his  findings,  in  part. 

*  United  States  Immigration  Commission,  Reports,  vol.  i,  pp.  500-1. 


148  CONTEMPORARY  THEORIES  OF  UNEMPLOYMENT  [148 

The  restrictive  measures  suggested  by  the  Commission 
are  seven  in  number,  the  three  most  important  being  "  the 
exclusion  of  those  unable  to  read  or  write  in  some  lan- 
guage," "  the  limitation  of  the  number  of  each  arriving 
each  year  to  a  certain  percentage  of  the  average  of  that 
arriving  during  a  given  period  of  years,"  and  "  the  exclu- 
sion of  unskilled  laborers  unaccompanied  by  wives  or  fami- 
lies." ^ 

An  earlier  government  investigational  commission,  the 
United  States  Industrial  Commission,  formed  a  similar 
opinion.  ".  .  .  the  general  conclusion  is  inevitable  that 
while  a  moderate  flow  of  immigration  may  be  assimilated 
without  depressing  effects,  a  rapid  influx  of  immigrants 
with  low  standards  of  living,  crowding  into  the  cities  and 
into  the  less  skilled  occupations,  creates  an  unfair  compe- 
tition with  those  already  here,  intensifies  the  effects  of  other 
depressing  causes,  and  weakens  the  organization  of  the 
working  people,  by  which  they  hope  materially  to  improve 
their  earnings."  ^  In  still  another  phase  of  the  unemploy- 
ment situation,  the  Commission  contends,  does  immigration 
serve  to  accentuate  the  problem.  The  evil  of  excessive 
seasonal  concentration  of  production  in  a  short,  busy  season 
is  held  to  be  made  possible  by  "  the  over-supply  of  un- 
organized labor  and  the  necessity  under  which  the  em- 
ployees exist  of  working  more  hours  when  they  find  em- 
ployment in  order  to  compensate  for  the  period  of  idleness." 
"  It  is  mainly  the  presence  of  a  large  supply  of  immigrant 
workpeople  and  their  willingness  to  work  more  hours  that 
make  it  possible  to  concentrate  production  "  in  the  trades 
marked  by  that  practice.^ 

*  United  States  Immigration  Commission,  Reports,  vol.  i,  p.  47. 
"^  United  States  Industrial  Commission,  Final  Report  (vol.  19  of  com- 
plete report,  Washington,  1902),  p.  969. 

»/&fd.,  p.  751. 


149]  CONTEMPORARY  AMERICAN  THEORIES  149 

*'  Agriculturalizing  the  immigrant  "  is  not  looked  upon 
b}^  the  Industrial   Commission  as  a  final  solution  of  the- 
problem,  though  of  value  when  combined  with  other  meas- 
ures/ Various  restrictive  measures  designed  to  raise  the  bars 
higher  and  so  keep  out  some  of  the  surplus  are  suggested.^ 

Jeremiah  Jenks  and  W.  Jett  Lauck  ^  favor  a  like  restric- 
tive program.  Though  this  policy  is  based  upon  other 
reasons  than  a  belief  in  a  superfluity  of  labor,  it  is  to  be 
noted  that  among  their  conclusions  it  is  stated  that  "  the 
point  of  complete  saturation  has  already  been  reached  in 
the  employment  of  recent  immigrants  in  mining  and  manu- 
facturing establishments."  *  The  authors  are  very  definitely 
in  favor  of  restriction,  holding  such  a  policy  to  be  a  neces- 
sary first  step  toward  ameliorating  the  present  conditions 
of  industrial  affairs,  under  which  "  not  only  the  economic 
welfare  of  the  American  wage-earner  but  the  maintenance 
of  our  political  and  social  institutions  are  threatened."  ^ 

The  American  Federation  of  Labor  has  consistently  ad- 
vocated restriction  of  immigration,  basing  its  attitude  in 
part  on  the  point  being  considered  here — that  immigration 
is  a  direct  cause  of  unemployment.  Its  policy  is  expressed 
in  a  statement  submitted  to  the  United  States  Immigration 
Commission  ^  by  Samuel  Gompers,  president  of  the  Fed- 
eration. One  of  the  exhibits  in  the  statement,  an  article  by 
John  Mitchell,  states  ''  That  there  is  an  inseparable  relation 
betw^een  unemployment  and  immigration  is  demonstrated 
by  all  the  statistics  which  are  available  upon  the  subject."  ^ 

^  United  States  Industrial  Commission,  op.  cit.,  pp.  971-977. 

'  Ibid.,  pp.  995-1014. 

^  The  Immigration  Problem  (New  York,  1913). 

*  Ibid.,  p.  210. 

*  Ibid.,  p.  213. 

*  United  States  Immigration  Commission,  Reports,  vol.  41,  pp.  369-431. 
'  Ibid.,  p.  374.    That  the  "  glutting  of  the  labor  market  through  im- 


I^o  CONTEMPORARY  THEORIES  OF  UNEMPLOYMENT  [150 

The  opinion  that  immigration  is  a  cause  of  unemploy- 
ment, and  that  therefore  restriction  is  necessary,  is  quite 
commonly  held.  The  New  York  Commission  on  Employ- 
ers' Liability  reports :  "  The  large  and  continuous  additions 
to  the  laboring  population  of  the  State  due  to  immigration 
are  among  the  most  important  single  causes  of  unemploy- 
ment. Immigration,  no  doubt,  accounts  in  part  for  the 
chronic  over-supply  of  labor  revealed  by  the  statistical  evi- 
dence we  have  presented."  ^  Prescott  F.  Hall  similarly 
holds  that  "  The  displacement  of  large  numbers  of  native 
workers  by  foreigners  who  underbid  them  affects  the  stand- 
ard of  living,  not  only  by  direct  competition  but  by  increas- 
ing the  ranks  of  the  unemployed."  ' 

They  who  contend  that  immigration  is  a  cause  of  un- 
employment do  not  hold  the  field  alone,  however.  Isaac  A. 
Hqurwich  is  the  staunchest  defender  of  the  view  that  the 
solution  of  unemployment  is  to  be  found  by  reforming 
other  conditions,  not  by  checking  the  incoming  alien.  Hour- 
wich  first  develops  the  orthodox  explanation  of  unemploy- 

migration"  is  merely  temporary  and  that  the  consequent  over-supply 
of  labor  in  the  large  cities  is  temporary,  is  asserted  by  Mitchell  in  an 
earlier  publication.  The  evils  of  even  this  temporary  glut  are  strongly 
emphasized,  however.    Organized  Labor  (Philadelphia,  1903),  p.  182. 

John  R.  Commons,  Races  and  Immigrants  in  America  (New  York, 
1911),  pp.  115-116,  quotes  some  interesting  resolutions  adopted  by  the 
General  Executive  Board  of  the  United  Garment  Workers  of  America, 
which  consists  with  one  exception  of  iRussian  Jews.  The  resolutions 
allege  that  the  labor  market  has  been  overstocked  so  that  the  workers 
of  this  country  are  seriously  menaced.  Congress  is  called  upon  to 
completely  suspend  immigration  for  a  term  of  years,  and  other  drastic 
measures  are  urged. 

^  Report  to  the  Legislature  of  the  State  of  New  York  by  the  Com- 
mission appointed  to  Inquire  into  the  Question  of  Employers'  Liability 
and  Other  Matters,  Third  Report,  Unemployment  and  Lack  of  Farm 
Labor  (Albany,  1911),  pp.  7-8. 

^Immigration  (New  York,  1913),  p.  135. 


151  ]  CONTEMPORARY  AMERICAN  THEORIES  151 

ment,  accounting  for  the  glutting  of  the  labor  market  by 
Beveridge's  "  labor  reserve "  argument/  He  next  pro-~ 
ceeds  to  refute  the  argument  that  this  "  normal  glutting  " 
might  be  aggravated  by  immigration.  If  underbidding  by 
the  cheaper  alien  forces  the  native  out  of  work,  the  per- 
centage of  unemployment  should  be  higher  among  the 
natives  in  the  industries  in  which  they  both  work,  alleges 
Hourwich.  Statistics  from  the  Report  of  the  United  States 
Immigration  Commission  are  quoted  to  disprove  this  argu- 
ment.^ Furthermore,  the  ratio  of  unemployment  is  least 
in  the  states  having  the  largest  proportion  of  immigrant 
wage-earners,  greatest  in  those  where  the  proportion  of  im- 
migrants is  lowest.  Immigration  and  unemployment  statis- 
tics are  next  compared  over  a  period  of  years,  Hourwich  at- 
tempting to  show  by  these  figures  that  with  increasing  immi- 
gration unemployment  decreases,  and  with  declining  immi- 
gration unemployment  increases.^  This  is  explained  by  the 
fact  that  "  unemployment  and  immigration  are  the  effects 
of  economic  forces  working  in  opposite  directions;  that 
which  produces  business  expansion  reduces  unemployment 
and  attracts  immigration,  that  which  produces  business  de- 
pression increases  unemployment  and  reduces  immigra- 
tion." *  It  is  merely  a  case  of  economic  supply  and  de- 
mand, says  Hourwich  in  another  article;  '^  there  may  be 
fluctuations,  but  in  the  long  run  the  supply  of  immigrants 
will  adjust  itself  to  the  demand.  Holding  it  as  proved  that 
unemployment  is  not  the  result  of  over-population,  Hour- 
wich contends  that  it  necessarily  follows  that  "  the  limita- 

^Immigration  and  Labor  (New  York,  1912),  pp.  114-125. 
^Ibid.,  pp.  126-128. 
^Ibid.,  pp.  137-139. 
*  Ibid.,  p.  145. 

^Political  Science  Quarterly,  December  191 1,  "The  Economic  As- 
pects of  Immigration"  (vol.  xxvi,  no.  4),  pp.  615-42. 


1^2  CONTEMPORARY  THEORIES  OF  UNEMPLOYMENT   [i^^ 

tion  of  the  number  of  wage-earners  can  promise  no  relief 
against  unemployment."  ^ 

Not  quite  so  emphatic  in  their  arguments  are  others  who 
do  not  admit  immigration  as  a  cause  of  unemployment. 
Helen  L.  Sumner,  holding  that  ".  .  .  these  cycles  (of  pros- 
perity and  depression)  have  a  greater  influence  than  can  be 
attributed  to  the  competition  of  alien  labor,"  ^  considers 
the  case  against  immigration  to  be  unproved.  Frances  Kel- 
ler takes  the  same  attitude.  ".  .  .  we  do  not  know  whether 
our  reserve  of  immigrant  labor  is  larger  than  the  country 
should  carry  or  not."  ^ 

The  most  recent  statement  of  the  "  present-day  analysis 
of  unemployment "  is  that  of  Leiserson.*  It  is  held  here  to 
be  definitely  established  that  there  is  "no  absolute  overplus 
of  labor,"  that,  though  ports  of  entry  for  immigrants  and 
certain  occupations  may  be  over-supplied  with  labor,  there 
are  always  other  parts  of  the  country  and  other  occupations 
capable  of  using  more  labor  than  they  have.  Leiserson, 
therefore,  sides  with  those  who  look  beyond  immigration 
for  the  fundamental  causes  of  unemployment.** 

^  Immigration  and  Labor,  p.  146. 

'^  Adams  and  Sumner,  Labor  Problems  (New  York,  1905),  p.  87. 

^  Out  of  Work,  p.  147. 

*  Political  Science  Quarterly,  March  1916,  "  The  Problem  of  Unem- 
ployment Today,"  vol.  xxxi,  no.  i,  pp.  1-24. 

^Ibid.,  pp.  12-14. 

The  Surplus  Labor  Theory  of  Unemployment 

Mention  of  the  theory  that  unemployment  is  due  to  a  real  surplus  of 
labor  has  been  made  at  various  points  in  the  preceding  analysis.  It 
was  not  taken  up  at  length  because  virtually  discarded  by  the  leading 
English  students.  A  brief  statement  of  the  development  and  present 
status  of  the  theory  in  England  is  relevant  at  this  point,  however,  for 
it  has  a  bearing  upon  the  question  of  the  relation  of  immigration  to 
unemployment. 

Malthusianism  was  in  its  essence  a  theory  that  over-population  was 
the  cause  of  destitution.     (C/.  supra,  pp.  15  et  seq.)     The  tendency  of 


153]  CONTEMPORARY  AMERICAN  THEORIES  153 

One  other  phase  of  the  immigration  question,  in  its  re- 
lation to  unemployment,  should  be  noted.    The  necessity  of~ 
the  distribution  of  immigrants  upon  their  arrival,  of  their 

population  to  increase  faster  than  the  power  of  production  was  believed 
to  be  the  cause  of  unemployment,  pauperism,  and  all  the  accompanying 
misery.  How  Ricardo  completely  reversed  this  theory  that  the  power 
of  production  was  outstripped  by  population,  in  contending  that  a  sur- 
plus of  labor  might  result  from  increased  power  of  production,  is  aptly 
pointed  out  by  William  AI.  Leiserson  (in  the  above-mentioned  article, 
pp.  7-8).  For  Ricardo  claimed  that  the  introduction  of  machinery  and 
improved  processes  resulted  in  the  permanent  displacement  of  labor. 
{Cf.  supra,  pp.  17  et  seq.)  ''Thus,"  says  Leiserson,  "the  doctrine  that 
labor  is  superfluous  because  population  grows  faster  than  production 
becomes  a  doctrine  that  increased  productive  power  creates  a  surplus 
of  labor." 

The  same  theory  of  a  superfluity  of  labor  is  inherent  in  poor-law 
procedure  prior  to  1834.  The  practice  of  community  support  of  the 
able-bodied  out  of  the  rates  was  based  largely  upon  the  belief  that 
such  a  surplus  existed.  (Cf.  Report  of  Royal  Commission  on  the  Poor 
Laws,  1909,  pt.  vi,  ch.  9,  sec.  442.)  The  Royal  Commission  of  1834,  as 
has  been  noted  above  (pp.  26  et  seq.),  repudiated  this  theory,  and  based 
their  recommendations  upon  the  doctrine  of  personal  responsibility  for 
unemployment. 

The  idea  that  there  are  more  workers  than  work  did  not  die,  how- 
ever. It  has  appeared  constantly  in  popular  discussion,  and  has 
been  voiced  at  various  times  by  students  of  the  problem.  The  London 
County  Council  expressed  it  in  a  rather  tentative  form  in  1903.  "  If  it 
is  a  fact  that  there  does  not  exist  sufficient  work  in  the  country  to 
afford  employment  for  the  whole  population,  that  circumstance  alone 
appears  to  warrant  a  consideration  as  to  whether  the  reduction  of  the 
hours  of  labor  to  a  reasonable  limit,  in  the  interests  of  industry  and 
labor  alike,  is  not  a  matter  of  the  highest  importance."  (Quoted, 
Brassey-Chapman,  Work  and  Wages,  London,  1908,  vol.  ii,  Wages  and 
Employment,  p.  352.)  The  Webbs  speak  of  the  "  surplus  of  labor 
power  which  already  exists  in  the  partial  idleness  of  huge  reserves  of 
under-employed  men"  (Minority  Report,  pt.  ii,  p.  268),  and  state  that 
".  .  .  there  exists  in  the  United  Kingdom  today  no  inconsiderable  sur- 
plus of  labor."  They  qualify  their  assertions,  however,  by  admitting 
that  this  is  not  a  surplus  made  up  of  workmen  who  could  not,  with  an 
im.proved  organization  of  industry,  be  productively  employed.  The 
surplus  of  which  they  are  seeking  to  dispose  is  not  a  real  superfluity 
of  labor,  therefore. 

The  most  emphatic  statement  that  there  is  a  real  surplus  is  made  by 


154  CONTEMPORARY  THEORIES  OF  UNEMPLOYMENT  [154 

industrial  and  regional  guidance,  is  emphasized  by  those 
who  argue  for  increased  restriction.  The  congestion  of 
immigrants  in  certain  occupations  and  in  certain  cities  is 

Norman  B.  Dearie  (Industrial  Training,  London,  1914).  His  theory 
of  a  "  Defective  Demand  "  (i.  e.  one  not  sufficient  to  engross  the  total 
supply  of  labor)  has  been  referred  to  (supra,  p.  50).  It  is  true,  he 
says,  that  ".  .  .  under  existing  methods  of  employment  the  whole  supply 
is  required  for  some  purpose  or  other.  But  there  is  more  than  enough 
of  it  (labor)  to  permit  the  free  use  of  the  more  irregular  and  wasteful 
methods  of  employment,  and  to  provide  for  the  growth  of  large  re- 
serves of  labor,  both  of  men  and  boys"  (p.  437).  Were  it  not  for  this 
superfluity  of  labor,  Dearie  contends,  the  present  vicious  waste  of  juve- 
nile and  adult  labor  in  faulty  methods  of  industrial  training,  "bhnd 
alleys,"  and  in  unnecessarily  large  labor  reserves,  could  never  go  on. 
That  they  exist  is  proof  of  the  existence  of  a  surplus  (pp.  436-452). 

Arguments  contradictory  to  this  theory  of  an  excessive  number  of 
workers  are  advanced  by  most  of  the  writers  on  unemployment.  Thus, 
Herbert  Samuel,  in  denying  the  theory  that  England  is  over-populated, 
stated:  ".  .  .  .  those  who  hold  this  view  forget  that,  other  factors 
being  constant,  the  development  of  a  country's  natural  resources  and 
its  foreign  trade  increases  with  the  growth  of  its  population  and 
diminishes  with  its  fall,  that  a  small  population  may  mean  a  smaller 
production  and  not  a  greater  regularity  of  employment,  and,  conversely, 
that  an  increase  of  population  may  not  involve  an  addition  to  the  ranks 
of  the  unemployed."  (Reservation  of  Herbert  Samuel  in  the  Report 
of  Agricultural  Settlements  in  British  Colonies,  1906,  p.  24.  Quoted  by 
Stanley  C.  Johnson,  A  History  of  Emigration  from  the  United  King- 
dom to  North  America,  1 763-1912,  London,  1913,  pp.  304-5.)  Rowntree 
and  Lasker  assert  that  **.  .  .  it  is  clear  that  the  absorption  of  a  perma- 
nent surplus  of  efficient,  even  though  unskilled  labor  cannot  be  an  in- 
soluble problem  unless  there  is  a  shortage  of  one  or  both  the  other  two 
factors  in  the  production  of  wealth,  vis.,  land  and  capital.  As  there  is 
no  such  shortage  in  England  today,  it  must  be  possible  for  statesman- 
ship to  bring  unemployed  labor  into  union  with  unemployed  land  and 
capital,  and  so  absorb  any  surplus  which  might  result  from  decasual- 
ization."     (Unemployment,  London,  191 1,  pp.  141-2.) 

Beveridge  goes  into  a  somewhat  more  detailed  argument  to  prove 
that  "unemployment  cannot  be  attributed  to  any  general  want  of  ad- 
justment between  the  growth  of  the  supply  of  labor  and  the  growth  of 
the  demand."  (Unemployment,  London,  1912,  p.  11.)  The  orthodox 
economic  arguments  are  brought  forward  to  show  that  not  only  is  there 
a  general  dependence  of  the  supply  of  population  upon  demand,  but  a 


155]  CONTEMPORARY  AMERICAN  THEORIES  155 

probably  the  greatest  obstacle  to  their  assimilation,  as  well 
as  the  chief  cause  of  their  alleged  intensification  of  the" 
problem  of  unemployment.  It  is  again  merely  the  question 
of  labor-market  organization,  of  adjusting  supply  to  de- 
mand, geographically  and  occupationally.  Especially  is  this 
occupational  or  qualitative  maladjustment  due  to  the  influx 
of  immigrants  to  be  noted.  For  the  question  of  industrial 
training  as  a  means  of  providing  a  labor  force  qualitatively 
adapted  to  the  industrial  needs  of  the  country  is  peculiarly 
pertinent  to  the  immigration  situation.  The  need  of  an 
agency  for  the  geographical  distribution  of  immigrants  has 
long  been  felt.  The  Immigration  Act  of  February  20,  1907, 
provided  for  the  establishment  of  a  division  of  information 
designed  "  to  promote  a  beneficial  distribution  of  aliens 
admitted  into  the  United  States  among  the  several  States 
and  Territories  desiring  immigration."  ^  For  this  purpose 
the  division  is  to  "  gather  from  all  available  sources  useful 
information  regarding  the  resources,  products,  and  physical 
characteristics  of  each  State  and  Territory,  and  shall  pub- 
lish such  information  in  different  languages,  and  distribute 
the  publications  among  all  admitted  aliens."  The  work  has 
been  carried  on  with  a  fair  degree  of  success,  especially  in 
the  direction  of  immigrants  to  agricultural  positions.^     In 

more  immediate  dependence  of  the  demand  upon  the  supply  (p.  5). 
Secondly,  Beveridge  shows  that  there  are  not  too  many  men  in  Eng- 
land for  the  available  land,  the.  depopulation  of  the  rural  districts 
proving  the  fact.  That  the  wealth  of  the  country  and  the  productivity 
per  head  of  the  population  continue  to  increase  is  further  proof  that 
there  is  no  over-population,  for  that  would  mean  that  the  law  of  dimin- 
ishing returns  had  come  to  apply  to  labor  generally.  Finally,  the  rising 
reward  to  labor,  the  fact  that  its  price  is  rising  nominally  and  relatively, 
is  held  to  show  conclusively  that  there  is  no  superabundance  of  labor 
and  no  tendency  for  labor  to  become  of  decreasing  importance  as  a 
factor  in  production  (pp.  8-10). 

1  Immigration  Act  of  February  20,  1907,  section  40. 

'  For  details  of  the  workings  of  the  Division  of  Information,  includ- 


1 56  CONTEMPORARY  THEORIES  OF  UNEMPLO  YMENT  [  1 56 

19 14,  in  response  to  a  widespread  feeling  that  a  national 
system  of  labor  exchanges  was  needed,  the  Division  of  In- 
formation of  the  Bureau  of  Immigration  attempted  to 
widen  the  scope  of  its  work  by  the  establishment  of  a 
nation-wide  system  of  placement  bureaus,  post-offices 
throughout  the  country  being  utilized  as  offices.  The  at- 
tem.pt  was  rather  unfortunate,  there  being  no  adequate 
preparations  made,  a  trained  staff  being  lacking,  and  the 
post-offices  being  unfitted  for  such  work/ 

This  question  of  the  distribution  of  immigrants  has  re- 
ceived considerable  attention  in  the  literature  on  immigra- 
tion, and,  as  well,  in  that  on  unemployment.  The  Immi- 
grants in  America  Review^  has  featured  it,  Frances  Kellor  ^ 
has  emphasized  it,  Peter  Roberts  *  and  Frederic  Haskin  ^ 
devote  space  to  it.  The  disorganization  of  our  immigrant 
labor  market  and  the  chaotic  conditions  prevailing  in  this  one 
industrial  field  have  been  brought  sharply  home  to  the 
United  States.  Fortunately,  the  attack  on  disorganization 
here  appears  to  be  leading  to  a  campaign  against  the  more 
important  maladjustments  prevailing  over  the  whole  field 
of  labor  placement.^ 

ing  statistics  of  distribution,  see  the  Reports  of  the  Chief  of  the  Divi- 
sion, appearing  in  the  Annual  Reports  of  the  Commissioner  General  of 
Immigration. 

^  A  "  conference  on  employment "  for  the  furtherance  of  this  plan 
was  held  at  San  Francisco  in  August  1915,  under  the  auspices  of  the 
United  States  Department  of  Labor.  A  report  of  the  proceedings  ap- 
pears in  the  Monthly  Review  of  the  United  States  Bureau  of  Labor 
Statistics,  October  1915  (vol.  i,  no.  4). 

-  Cf.  especially  The  Immigrants  in  America  Review  for  March  1915 
(vol.  i,  no.  i). 

*  Out  of  Work,  pp.  1 10-148. 

*  The  New  Immigration  (New  York,  1912),  pp.  63-66. 
^  The  Immigrant  (New  York,  1913),  pp.  92-99. 

*  Cf.   also  in   connection   with   immigrant   distribution :    New  York, 


157]  CONTEMPORARY  AMERICAN  THEORIES  157 

3.    THE   FLOATING  LABORER 

A  second  element  in  the  unemployment  situation  whicKT 
is  found  in  an  exceptionally  aggravated  form  in  the  United 
States  is  the  problem  of  the  floating  laborer.  Its  magnitude 
and  importance,  and  something  of  its  fundamental  nature 
are  just  beginning  to  be  understood.  The  United  States 
Commission  on  Industrial  Relations  reports :  "  There  are 
large  numbers  of  American  workers,  in  all  probability  sev- 
eral; millions,^Who  are  not  definitely  attached  either  to  any 
particular  locality  or  to  any  line  of  industry."  ^  Samuel 
Gompers,  president  of  the  American  Federation  of  Labor, 
stated  to  that  body :  "  The  lot  of  the  migratory  laborer  in 
the  United  States  today  is  in  some  points  worse  than  slav- 
ery. .  .  .  The  very  large  proportion  of  unskilled  or  casual 
workers  who  at  the  present  time  usually  find  employment 
only  on  short  jobs  or  at  seasonal  work  suffer  a  precarious 
existence.  As  they  move  from  place  to  place  they  often  go 
hungry,  and  while  at  work  their  food  is  usually  of  a  poor 
quality,  ill  prepared.  .  .  .  The  character  of  much  of  the 
work  performed  in  the  United  States  does  not  permit  of 
steady  employment  of  a  regular  body  of  men.  ...  In  all, 
it  is  difficult  to  estimate  how  many  men  are  thus  living  in 
the  United  States  today,  but  the  number  reaches  into  the 
^nmior^'  ^ 

First  Annual  Report  of  the  Bureau  of  Industries  and  Immigration,  igii 
(Albany,  1912),  pp.  33-42;  New  York,  Report  of  the  Commission  of 
Immigration  (Albany,  1909),  pp.  109-128.  United  States  Bureau  of 
Labor,  Italian,  Slavic  and  Hungarian  Unskilled  Immigrant  Laborers 
in  the  United  States,  Bulletin  No.  72  (Washington,  September  1907), 
pp.  403-486;  Massachusetts,  Report  of  the  Commission  on  Immigration 
(Boston,  1914),  pp.  37-53. 

*  United  States  Commission  on  Industrial  Relations,  Final  Report 
(Washington,  1915),  p.  156. 

'  Quoted,  Fifteenth  Biennial  Report  of  the  Bureau  of  Labor  Statis- 
tics of  California,  1911-1912  (iSacramento,  1912),  pp.  49-50. 


J 


158  CONTEMPORARY  THEORIES  OF  UNEMPLOYMENT  [158 

This  problem  of  the  migratory  worker — a  problem  aris- 
ing out  of  the  seasonal  character  of  the  nation's  industries 
and  the  country's  wide  geographical  extent — is  closely  in- 
terwoven with  the  allied  questions  of  the  tramp  and  vagrant. 
In  the  first  place,  the  line  of  cleavage  between  these  classes 
at  any  one  time  cannot  be  clearly  drawn.  The  tramp  and 
the  vagrant  work  at  times ;  conversely  the  migratory  worker 
is  likely  to  beg  or  steal  at  times.  Numerous  classifications, 
however,  have  been  made,  all  with  a  doubtful  degree  of 
precision.  lAlice  Solenberger  ^  divides  "  tramps "  into 
those  wandering  continuously,  those  wandering  only  at  par- 
ticular times  or  seasons,  and  those  wandering  periodically 
with  long  intervals  of  regular  life  between.  Edmond  Kelly 
makes  four  divisions :  youths  under  twenty-one  who  tramp 
for  amusement;  able-bodied  workers  and  misdemeanants; 
neuropaths;    the   non-able-bodied.^    i These   classifications, 

I  One  Thousand  Homeless  Men  (New  York,  i^liX^pp.  209-238. 
*  The  Elimination  of  the  Tramp  (New  Yorl^  iQoSJi  pp.  9-1 1.    Kelly 
includies   in   an  appendix    (pp.    103-107)    several'  other   classifications. 
Picturesque,  and  at  the  same  time  having  a  great  element  of  truth,  is 
that  of  Dr.  Reitman,  who  is  himself  a  tramp : 
f  (i)  Tramp. 
(o)  Dreams  and  wanders. 

(b)  Trampdom — Main  lines 
of  railroads. 

(c)  Runaway  boy. 


Vagrants 

or  penniless 

wanderers. 

Every  species 

is  itself 

subclassified 

according  to 

(a)  Character, 

(b)  Geographical 

distribution, 

ic)   Type. 


Tramp  criminal. 
Criminal  tramp. 
Neuropathic  tramp. 


(2)  HOBO. 

(a)  Works  and  wanders. 

(b)  Hoboland — farms,  ice- 
houses, section  houses, 
mines,  etc. 

(c)  Non-employed. 

(3)  Bum. 

(a)  Drinks  and  wanders. 
(&)  Bumville — barrel-houses 

and  saloons. 
(c)  Drunkard. 


Tramp  hobo. 
Train  hobo. 
Bum  hobo. 
Criminal  hobo. 
Neuropathic  hobo. 


Criminal  bum. 
Neuropathic  bum. 


159]  CONTEMPORARY  AMERICAN  THEORIES  159 

made  by  persons  in  whose  work  the  tramp  proper  has 
bulked  large,  tend  to  minimize  the  very  large  proportion  oi 
wandering  workers  proper. 

In  a  second  way  is  the  problem  of  the  migratory  laborer 
interlocked  with  those  of  the  tramp  and  vagrant.  For  the 
path  downwards  is  easy  to  travel,  and  a  large  number  of 
the  best  type  of  laborer  have  gone  over  it.  The  Indus- 
trial Relations  Commission  traces  their  course,  r  Young 
men,  full  of  ambition  and  high  hopes  for  the  future,  start 
their  life  as  workers,  but,  meeting  fajlure  after  failure  in 
establishing  themselves  jn„  some  tra,de .  gr  ^^^^c^^^  their  am- 

bitions and  hopes  go  to  pieces,  and  they  gradually  sink  into 
the  ranks  of  the  migratory  and  casual  workers.  Continuing 
their  existence  in  these  ranks,  they  begin  to  lose  self- 
respect  and  beQome  '  hoboes.'  Afterwards,  acquiring  cer- 
tain negative  habits,  as  those  of  drinking  or  begging,  and 
losing  all  self-control,  self-respect,  and  desire  to  work,  they 
become  '  down-and-outs  ' — tramps,  bums,  vagabonds,  gam- 
blers, pickpockets,  yeggmen,  and  other  petty  criminals-:- 
in  short,  public  parasites,  the  number  of  whom  seems  to  be 
growing  faster  than  the  general  population."  ^  Though 
this  picture  is  somewhat  overdrawn,  the  tendency  to  sink 
is  undoubtedly  ever  present  in  the  life  of  the  migratory 
worker. 

The  strongest,  perhaps,  of  the  forces  serving  to  push  the 
migratory  laborer  down  into  the  ranks  of  the  non-workers, 
to  increase  the  irregularity  of  his  working  periods,  and 
thus  to  intensify  the  normal  problem  of  unemployment,  has 
been  the  condition  of  the  camps  in  which  this  class  of 

C*  ynited  States   Commission  on  Industrial  Relations,  Final  Repor^^ 
"^157.     Will  Irwin  has  sketched  this  descent  graphically,  basing  his 
articles  on  the  findings  of  Peter  A.  Speak,  who  covered  the  field  of 
migratory  labor  for  the  Industrial  Relations  Commission.     Cf.  "The 
Floating  Laborer,"  Saturday  Evening  Post,  May  9,  June  6,  July  4,  1914. 


l6o  CONTEMPORARY  THEORIES  OF  UNEMPLOYMENT  [i6o 

worker  has  been  housed.  The  flare-up  at  Wheatland  in 
August,  191 3,  first  drew  the  attention  of  CaHfomia  to  the 
character  of  these  camps/  The  resulting  investigation 
throughout  the  state  disclosed  intolerably  filthy  and  in- 
sanitary conditions  in  a  large  percentage  of  such  quarters.^ 
Nor  has  California  been  alone  in  this  regard.  Leiserson,  as 
superintendent  of  the  Wisconsin  public  employment  offices, 
attributed  in  part  to  camp  conditions  the  fact  that  men  re- 
fused to  take  work  offered  them.^  Conditions  similar  to 
those  in  California  are  noted  in  New  York,*  and  in  the 
Middle- West. ^  The  relation  of  these  conditions  to  irregu- 
larity of  employment  seems  to  be  directly  proved  by  statis- 
tical evidence,  for  the  labor  "  turnover "  varies  roughly 
throughout  California  in  accordance  with  the  character  of 
the  living  quarters  provided  in  the  different  seasonal  occu- 
pations. A  "  turnover  "  of  100  per  cent  (complete  replace- 
ment of  the  labor  force)  in  a  two-week  period  is  not  un- 
common in  certain  of  the  railroad  and  lumber  camps  of  the 
state ;  in  exceptional  cases  the  period  has  been  even  briefer.® 

Cf.  Carkton  H.  Parker,  "The  Wheatland  'Riot,"  in  The  Survey, 
<5  W  V^arch  21,  1914  (vol.  31,  no.  25),  pp.  768-770. 

2  For  statistics  on  this  SHbject,  cf.  The  First  Annual  Report  of  the 
Commission  of  Immigration  and  Housing  of  California  (Sacramento, 
1915). 

^American  Labor  Legislation  Review,  Feb.  1913  (vol.  iii,  no.  i),  p. 
132- 

^Report  of  the  Commission  of  Immigration  of  the.  State  of  New 
York  (Albany,  1909),  pp.  126-128. 

^  Chicago,  Report  of  the  Mayor's  Commission  on  Unemployment,  pp. 
69-72. 

For  further  descriptions  of  the  working  conditions  of  the  migra- 
tory laborers,  cf.  Frances  A.  Kellor,  Out  of  Work,  chapter  on  *'  Immi- 
gration and  Unemployment,"  passim;  Peter  Roberts,  The  New  Immi- 
gration, pp.  66-69. 

*  Cf.  Carleton-  H.  Parker,  "  The  California  Casual  and  His  Revolt," 
Quarterly  Journal  of  Economics,  November,  1915  (vol.  30>  no.  i),  pp. 
1 19-122. 


h  VMa 


l6i]  CONTEMPORARY  AMERICAN  THEORIES  i6i 

fVVith.  dirty  qiiarters,  hard  work,,, poor  food,  and  long  hours  \ 
to  contend  with,  it  is  not  to  be  wondered  that  the  descent  j  ~& 
into  shiftlessness,  vagrancy,  and  crime  is  so  easy.  | 
""The  mode  of  treatment  of  migratory  persons  has  been 
indicated  above  in  the  consideration  of  the  tramp  and 
vagrancy  legislation  of  the  various  states.  Beyond  this  re- 
pressive type  of  relief  no  comprehensive  attempt  to  deal 
with  the  various  types  of  migratory  wanderers  and  with  the 
underlying  industrial  causes  has  been  made.  Certain  states 
have  started  the  cleaning-up  of  their  labor  camps;  New 
York  State  has  established  a  farm  colony  for  the  purpose 
of  regenerating  the  fallen  ones  of  this  class;  the  scattered 
public  employment  offices  represent  a  commencement  of  the 
task  of  organizing  and  directing  the  movements  of  labor. 
But  those  who  have  studied  the  situation  look  to  deeper- 
going  measures  for  a  possible  solution  of  the  various  prob- 
lems involved.  In  addition  to  making  recommendations 
for  a  national  system  of  labor  exchanges,  and  an  intelligent 
distribution  of  public  work,  the  Federal  Industrial  Rela- 
tions Commission  proposes  that  cheap  transportation  be  pro- 
vided, that  the  stealing  of  rides  be  eliminated,  that  cheap 
workingmen's  hotels  be  established,  and  that  state  and  fed- 
eral farm  colonies  be  provided  for  the  rehabilitation  of 
these  men.^  Alice  Solenberger  details  a  set  of  institutions, 
including  compulsory  farm  colonies,  for  the  treatment  of 
the  degenerate  in  these  classes.*  The  case  for  compulsory 
farm  colonies  is  put  most  strongly  by  Edmond  Kelly,^  who 
devotes  his  entire  book  to  the  explanation  of  that  type  of 
solution.  Kelly,  it  must  be  noted,  is  concerned  primarily 
with  the  tramp,  the  "  won't  work,"  and  does  not  attempt  to 
deal  with  the  deeper  economic  factors. 

^  Final  Report,  pp.  159-160. 

'  One  Thousand  Homeless  Men,  pp.  235-236. 

^  The  Elimination  of  the  Tramp  (New  York,  1908). 


l62  CONTEMPORARY  THEORIES  OF  UNEMPLOYMENT  [162 

The  problem  of  the  migratory  worker  and  the  migratory 
vagrant,  important  as  it  is  in  the  American  situation,  has  not 
as  yet  been  adequately  studied.  A  conception  of  its  im- 
portance is  dawning  upon  social  thinkers.  The  survey  has 
yet  to  be  made  which  will  point  the  way  to  a  definite  attack 
and  a  definite  solution. 


CHAPTER  V 
Conclusion 

Through  all  the  diverse  opinions  ^  as  to  the  causes  of 
unemployment  and  as  to  what  should  be  done  to  remedy 
the  situation,  the  central  theme  of  industrial  disorganiza- 
tion runs.  '^ .  .  .  The  nineteenth  century,"  two  students  of 
an  allied  problem  state,  **  left  the  twentieth  an  unenviable 
legacy — the  legacy  of  an  industrial  system  which  had  grown 
up  without  forethought,  and  whose  maladies  had  been 
treated  with  spasmodic  doses  of  medicine,  administered  in 

^  Space  and'  time  limitations  have  made  it  necessary  to  merely  men- 
tion certain  of  the  less  orthodox  and  less  widely  accepted  theories  of 
unemployment.  From  the  contention  of  the  extreme  individualist  that 
**.  .  .  it  is  the  imperfect  development  of  competition,  broadly  con- 
ceived, in  relation  to  the  intricate  economic  circumstances  with  which 
it  has  to  cope,  that  accounts  for  proficient  people  being  without  occu- 
pation" (S.  J.  Chapman,  in  Brassey-Chapman,  Work  and  Wages,  vol. 
ii,  "Wages  and  Employment,"  pp.  349-350)  to  the  attitude  of  the 
socialist  who  looks  upon  unemployment  as  "  co-extensive  with  the  capi- 
talist system  "(John  Spargo,  "  Sociahsm  as  a  Cure  for  Unemployment," 
in  Annals  of  the  American  Academy  of  Political  and  Social  Science, 
May  191S,  vol.  59,  pp.  157-64)  diverse  theories  run  a  wide  course. 
The  forty-year-old  theory  of  Henry  George  and  the  more  recent  one 
of  the  Federal  Industrial  Relations  Commission  agree  in  placing  land 
monopolization  as  a  cause.  The  unjust  distribution  of  income  has  been 
put  forward  as  a  basic  reason.  Politics,  the  sweating  system,  the  pre- 
vailing wage  system,  sun  spots,  the  tariff,  convict  labor,  the  minimum 
wage,  child  labor,  the  entrance  of  women  into  industry,  "big  busi- 
ness " — all  have  been  pilloried  as  responsible  for  unemployment.  Pos- 
sibly all  have  a  connection,  more  or  less  remote,  with  the  problem 
being  considered,  but  the  inclusion  of  a  discussion  of  them  in  the 
present  paper  has  been  impossible. 

163]  163 


1 64  CONTEMPORARY  THEORIES  OF  UNEMPLOYMENT  [164 

a  spirit  of  hopeful  experiment  rather  than  with  any  pro- 
found study  of  the  needs  of  the  system."  ^  The  necessary 
study  of  that  disorganized  condition  is  in  process  of  being 
made. 

For  complete  knowledge  of  all  the  factors  in  the  unem- 
ployment problem  further  investigation  is  needed.  But  the 
time  when  investigation  should  occupy  the  whole  field  is 
past.  William  Leiserson  ^  has  made  an  emphatic  appeal  for 
the  next  step  —  for  action,  for  the  carrying  through  of  a 
program  for  the  prevention  of  unemployment,  for  the  out- 
lining of  the  necessary  laws,  for  the  devising  of  the  needed 
administrative  machinery.  The  path  of  remedial  action  is 
not  yet  entirely  clear,  but  it  has  at  least  been  blazed.  Con- 
structive work,  for  which  investigation  has  sufficiently 
paved  the  way,  is  the  present  need. 

*  Dunlap  and  Denman,  English  Apprenticeship  and  Child  Labor 
(London,  1912),- p.  309. 

*"The  Problem  of  Unemployment  Today,"  Political  Science  Quar^ 
terly,  March  1916,  pp.  23-4. 


APPENDIX  I 

AMERICAN  STATISTICS  ON  UNEMPLOYMENT 

(These  references  do  not  include  publications  later  than  the  early- 
part  of  1916,  nor  are  they  intended  to  be  at  all  exhaustive  for  the 
period  previous  to  that  date.  They  are  designed  to  suggest  the  general 
character  of  American  statistics  on  unemployment,  rather  than  to  con- 
stitute a  complete  statement  of  all  such  statistics  existing.) 

The  earliest  figures  available  on  this  subject  are  those  gath- 
ered by  the  Massachusetts  Bureau  of  Statistics  of  Labor  in 
June  and  November,  1878,  and  published  in  the  Tenth  Annual 
Report  of  that  Bureau.  (Boston,  January  1879,  pp.  3-13.) 
Far  more  intensive  in  their  nature  are  those  compiled  in  con- 
nection with  the  Massachusetts  censuses  of  1885  and  1895. 
The  former  were  published  in  the  Eighteenth  Annual  Report 
of  the  Bureau  of  Statistics  of  Labor  (Boston,  December 
1887,  pp.  1-294),  the  latter  in  the  Massachusetts  State  Census 
of  1895.  The  34th  Annual  Report  of  the  Bureau  of  Statistics 
of  Labor  (Boston,  March  1904,  part  ii,  pp.  131-213)  con- 
tains some  data  on  the  amount  of  unemployment  at  that  time. 
The  Annual  Reports  of  the  Chief  of  the  Bureau  of  Statistics 
of  Labor,  from  1908  on,  give  figures  as  to  the  amount  of  un- 
employment among  organized  wage-earners. 

Statistics  showing  the  amount  of  unemployment  among 
members  of  trade  unions  in  New  York  State  have  been  pub- 
lished since  1897.  In  1897  and  1898  these  were  published  in 
the  Annual  Reports  of  the  Bureau  of  Labor  Statistics  of  that 
state.  From  1899  to  19 13  they  appeared  quarterly  in  the 
Bulletin  of  the  Bureau  of  Labor  Statistics.  Since  September 
19 1 3,  a  special  series  of  Bulletins  on  Unemployment  have  been 
issued,  while  more  recently  the  issue  of  monthly  Labor  Market 
Bulletins  has  been  begun.  Though  restricted  in  their  scope 
to  organized  workers,  they  are  valuable  as  indices  to  seasonal 
165]  16s 


1 66  APPENDIX  I  [1 66 

and  cyclical  fluctuations  and  other  business  changes.  Though 
a  compilation  of  individual  causes  of  unemployment,  such  as 
lack  of  work,  lack  of  material,  weather,  labor  disputes,  dis- 
ability, etc.,  is  included,  no  investigation  of  the  more  funda- 
mental causes  is  attempted. 

The  Report  to  the  Legislature  of  the  State  of  Neiu  York  by 
the  Commission  Appointed  .  .  .  to  Inquire  into  the  Question 
of  Employers'  Liability  and  Other  Matters — Third  Report — 
Unemployment  and  Lack  of  Farm  Labor  (Albany,  191 1,  pp. 
28-38)  contains  a  summary  of  previous  statistics  on  unem- 
ployment in  New  York  State,  together  with  additional  mate- 
rial gathered  by  the  Commission. 

The  United  States  Census  workers  gathered  data  on  un- 
employment in  1880,  but  lack  of  funds  and  doubt  as  to  their 
reliability  prevented  their  compilation.  The  census  of  1890 
contains  some  material  on  the  question.  That  of  1900  (volume 
on  Occupations)  deals  at  length  with  unemployment,  but  a 
warning  as  to  the  uncertain  character  of  the  findings  is  given. 
Similar  data  were  gathered  in  1910,  but  have  not  as  yet  been 
published. 

The  Bulletin  on  Manufactures  published  by  the  United 
States  Census  contains  general  statistics  of  the  number  em- 
ployed by  months.  The  Census  of  Manufactures  of  1905  has 
information  as  to  the  numbers  employed  in  all  manufacturing 
industries  in  1904,  by  months. 

The  United  States  Bureau  of  Labor  Statistics  has  done 
some  work  in  this  field,  and  is  at  present  publishing  valuable 
data.  The  i8th  Annual  Report  of  the  United  States  Com- 
missioner of  Labor  (1903)  details  the  amount  of  unemploy- 
ment among  25,440  families;  the  material  for  this  report  was 
gathered  during  the  years  1900-2. 

Of  their  later  publications  the  following  are  valuable  on 
this  subject: 

Bulletin  No.  10  (Miscellaneous  Series  No.  i,  on  Statistics 
of  Unemployment  and  the  Work  of  Employment  OMces  in  the 
United  States.  Previous  statistics  from  various  sources  are 
summarized. 


167]  APPENDIX  I  167 

Bulletin  No.  116  (Women  in  Industry  Series  No.  i). 
Hours,  Earnings  and  Duration  of  Employment  in  Selected 
Industries  in  the  District  of  Columbia. 

Bulletin  No.  iiq  (Women  in  Industry  Series  No.  2). 
Working  Hours  of  Women  in  the  Pea  Canneries  of  Wis- 
consin. 

Bulletin  No.  146  (Wages  and  Hours  of  Labor  Series  No. 
8).  Wages  and  Regularity  of  Employment  in  the  Dress  and 
Waist  Industry  of  New  York  City. 

Bulletin  No.  14/  (Wages  and  Hours  of  Labor  Series  No.  9). 
Wages  and  Regularity  of  Employment  in  the  Cloak,  Suit,  and 
Skirt  Industry.     (In  New  York  City  and  Boston.) 

Bulletin  No.  1^2  (Miscellaneous  Series  No.  10).  Unem- 
ployment in  New  York  City. 

Bulletin  No.  182  (Women  in  Industry  Series  No.  8).  Un- 
employment among  Women  in  Department  and  Other  Retail 
Stores  in  Boston,  Mass. 

Bulletin  No.  183  (Miscellaneous  Series  No.  12).  Regular- 
ity of  Employment  in  the  Women's  Ready-to-W ear  Garment 
Industries. 

The  Monthly  Reviews  which  the  Bureau  has  published  since 
July  191 5,  give  scattering  statistics  on  unemployment. 

The  Bureau  of  Labor  Statistics  has  been  conducting  in- 
vestigations on  the  "turn-over,"  concerned  with  the  average 
term  of  employment,  which  will  give  statistical  evidence  in  a 
field  of  unemployment  largely  untouched  as  yet. 

The  Annual  Reports  of  the  United  States  Geographical 
Survey  state  the  number  of  work  days  and  idle  days  in  the 
coal-mining  industry  in  the  United  States. 

Similar  information  for  the  mines  of  the  state  of  Illinois 
has  been  included  in  the  annual  Illinois  Coal  Report. 

Various  of  the  state  bureaus  of  labor  statistics  publish  data 
as  to  the  number  employed  by  months  in  the  different  manu- 
facturing industries,  and  other  scattered  material  touching  on 
the  problem. 

Reports  of  varying  scope  are  published  by  the  public  em- 
ployment offices,  state  and  municipal. 


I68  APPENDIX  I  [1 68 

The  Monthly  Labor  Market  Bulletin  issued  by  the  super- 
intendent of  the  state  employment  offices  of  Wisconsin  gives 
a  valuable  summary  of  general  conditions  in  that  state. 

The  American  Federationist,  the  official  organ  of  the  Amer- 
ican Federation  of  Labor,  published  data  concerning  the 
amount  of  unemployment  among  organized  workers,  from 
1899  to  1909.  The  number  unemployed  each  month,  and  the 
maximum  and  minimum  numbers  unemployed  each  year  were 
given.  Publication  of  this  information  was  discontinued  in 
1909  because  of  doubts  as  to  its  value. 

A  census  of  the  unemployed  was  made  in  Rhode  Island  in 
1908,  covering  the  urban  districts.  The  information  gathered 
appeared  in  the  22nd  Report  of  Industrial  Statistics,  Rhode 
Island,  1908. 

Figures  on  unemployment  in  Chicago  are  contained  in  two 
documents:  The  Report  of  the  Mayor's  Commission  on  Un- 
employment, Chicago,  March  1914;  Report  of  the  Mayor 
and  Aldermen  by  the  Chicago  Municipal  Markets  Commission 
on  a  Practical  Plan  for  Relieving  Destitution  and  Unemploy- 
ment in  the  City  of  Chicago.    Chicago,  December  28th,  1914. 

Some  statistics  on  conditions  in  Portland,  and  in  the  rest  of 
Oregon,  are  given  in  the  Reed  College  Record,  December 
1914,  No.  18,  ^  Study  of  the  Unemployed,  by  Arthur  Evans 
Wood. 

Of  value  as  showing  seasonal  fluctuations  in  a  particular 
industry  is  the  Special  Report  of  the  Bureau  of  Labor  Statis- 
tics of  California  on  Labor  Conditions  in  the  Canning  Indus- 
try (Sacramento,  1913). 

Statistical  analyses  of  the  irregularity  of  female  employ- 
ment in  various  industries  are  included  in  an  article  by  Irene 
Osgood  Andrews,  "  The  Relation  of  Irregular  Employment 
to  the  Living  Wage  for  Women,"  which  appeared  in  The 
American  Labor  Legislation  Review  for  June  191 5  (vol.  v, 
no.  2),  pp.  291-418. 

Data  indicating  the  percentage  of  unemployment  among 
wage-earners  in  fifteen  cities  of  the  United  States  during 
191 5  are  given  in  an  article  by  Royal  Meeker,  "  Some  Recent 


169]  APPENDIX  I  169 

Surveys  of  Unemployment,"  in  Annals  of  the  American  Acad- 
emy of  Political  and  Social  Sciences,  September  191 5  (voT. 
61),  pp.  24-9. 

Scott  Nearing  gives  a  resume  of  some  of  the  earlier  statis- 
tics in  ''  The  Extent  of  Unemployment  in  the  United  States" — 
Quarterly  Publications  of  the  American  Statistical  Associa- 
tion, September  1909  (vol.  ii,  new  series,  no.  87),  pp.  525-49. 

The  sources  of  unemployment  statistics  in  the  United 
States  are  indicated  in  a  paper  read  by  W.  M.  Leiserson  be- 
fore the  International  Conference  on  Unemployment.  Cf, 
Compte  Rendu  de  la  Conference  Internationale  de  Chomage 
(Paris,  191 1 ),  vol.  2,  rapport  no.  15,  "The  Fight  Against 
Unemployment  in  the  United  States." 


APPENDIX  II 

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(b)  Current  English  Theories  _^ 

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Booth,  Charles.  Life  and  Labour  of  the  People  in  London.  First 
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Bowley,  A.  L.  "  Wages  and  the  Mobility  of  Labor."  Economic  Jour- 
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Casson,  William  A.    Old  Age  Pension  Act,  1908.    London,  Knight,  190S. 

Chapman,  Sidney  J.,  and  Brassey,  Lord.  Work  and  Wages.  Part  II, 
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Chapman,  Sidney  J.,  and  Hallsworth,  H.  M.  Unemployment  in  Lan- 
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Charity  Organization  Society.  Report  and  Minutes  of  Evidence  of 
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Dawson,  W.  H.     The  Vagrancy  Problem,    London,  King,  1910. 

Dearie,  N.  B.    Industrial  Training.    London,  King,  1914. 

Drage,  Geoffrey.     The  Unemployed.    London,  Macmillan,  1894. 

Dunlop,  O.  J.    The  Farm  Laborer.    London,  Fisher  Unwin,  1913. 

Dunlop,  O.  J.,  and  Denman,  Richard  B.  English  Apprenticeship  and 
Child  Labor.    London,  Fisher  Unwin,  1912. 

Encyclopedia  Brittanica.    Eleventh  edition,  vol.  27,  pp.  578-80. 

George,  David  Lloyd.  The  People's  Insurance.  London,  Hodder  and 
Stoughton,  191 1. 

Gibbon,  I.  G.  Unemployment  Insurance:  A  Study  of  Schemes  of  As- 
sisted Insurance.    London,  King,  191 1. 

Great  Britain,  Boar<li  of  Trade.  Report  on  Agencies  and  Methods  for 
Dealing  with  the  Unemployed.    London,  Eyre  &  Spottiswoode,  1893. 

,  Departmental  Committee  on  Vagrancy.    Report.    London,  1906. 

,  Royal  Commission  on  the  Poor  Laws  and  Relief  of  Distress. 

Report.    London,  Eyre  &  Spottiswoode,  1909. 

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Greenwood,  Arthur.  Juvenile  Labor  Exchanges  and  After  Care,  Lon- 
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Hobson,  John  A.    The  Industrial  System.    London,  Longmans,  1909. 

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on  the  Poor  Laws.    Report,  Appendix,  vol.  20. 

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Johnson,  Stanley  C.  A  History  of  Emigration  from  the  United  King- 
dom to  North  America,  1763-1912.    London,  Routledge,  1913. 

Kelly,  Edmond.     The  Unemployables.    London,  King,  1907. 

Kropotkin,  Prince.  Fields,  Fa£tories,  and  Workshops.  London,  Put- 
nam, 1913. 

Money,  L.  G.  Chiozza.  Insurance  versus  Poverty.  London,  Methuen, 
1912. 

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Proceedings.     191 1,  1912.     London,  King. 

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(Ribton-Turner,  C.  J.  A  History  of  Vagrants  and  Vagrancy.  London, 
Chapman  &  Hall,  1887. 

Rowntree,  B.  S.,  and  Lasker,  B.  Unemployment  —  A  Social  Study. 
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Schloss,  D.  F.    Insurance  Against  Unemployment.    London,  King,  1909. 

United  States.  Special  Consular  Reports.  Vagrancy  and  Public  Char- 
ities in  Foreign  Countries.    Washington,  Department  of  State,  1893. 

Webb,  Sidney.  The  London  Program.  London,  Swan  Sonnenschein, 
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Webb,  Sidney  and  Beatrice.  Industrial  Democracy.  London,  Long- 
mans, 1902. 

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Minority  Report  of  the  Poor  Law  Commission.  London,  Long- 
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Webb,  Sidney,  and  Cox,  Harold.  The  Eight  Hours  Day.  London, 
Scott,  1891. 

Webb,  Sidney,  and  Freeman,  Arnold.  Seasonal  Trades.  London,  Con- 
stable, 1912. 

Whetham,  W.  C.  D.  Eugenics  and  Unemployment.  A  Lecture  Deliv- 
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Bowes  &  Bowes,  1910. 

(c)  Early  American  Theories  and  Practice 
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Bilgram,  Hugo.    Involuntary  Idleness..  Philadelphia,  Lippincott,  1889. 

Bowen,  F.    American  Political  Economy.    New  York,  Scribner,  i890~ 

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174  APPENDIX  11  [174 

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(d)  Tramp  and  Vagrancy  Legislation  1 

TRAMP  LAWS 

State,  Revised  Statutes  of 

Alabama   1907 

Connecticut    1913 

Delaware    1879 

Indiana 1908 

Iowa 1902 

Maine  1903 

Maryland    1906 

Massachusetts   1903 

Mississippi    1904 

Nebraska    1907 

New  Hampshire  1900 

New  Jersey   1910 

New  York 1911 

North  Carolina 1905 

Ohio  1908 

Pennsylvania 1879 

Rhode  Island    1896 

Vermont   1912 

vagrancy  laws 

Alabama    1907 

Arizona  1901 

Arkansas 1911 

California  1912 

Colorado   1912 

Connecticut    1913 

Delaware    1861 

Florida , 1907 

1  See  page  130  for  acknowledgment. 


175]  APPENDIX  II  1 75 

Georgia   1905 

Idaho    1908        — 

Illinois 1908 

Indiana    1908 

Iowa  1913 

Kansas    1905 

Kentucky    1904 

Louisiana    1912 

Maryland     1914 

Massachusetts    1913 

Michigan     1913 

Minnesota  1913 

Mississippi    1904 

Missouri    1909 

Montana    1907 

Nebraska    1907 

Nevada    1912 

New  Hampshire  1901 

New  Jersey   1910 

New  Mexico   1897 

New  York 1914 

North  Carolina 1908 

North  Dakota  1913 

Ohio    1908 

Oklahoma   1910 

Rhode  Island    1896 

South  Carolina  1902 

South  Dakota  1913 

Tennessee 1907 

Texas  1909 

Utah   1911 

Virginia     1912 

Washington    1909 

West  Virginia 1913 

Wisconsin   1911 

Wyoming    1899 

(e)  Current  American  Theories 

Adams  and  Sumner.    Labor  Problems.    New  York,  Macmillan,  1905. 

American  Academy  of  Political  and  Social  Science.  Annals.  Vol.  33, 
no.  I.    Industrial  Education.    January  1909. 

.    Vol.  2»z,  no.  2.    Labor  and  Wages.    March  1909. 

.    Vol.  59.    American  Industrial  Opportunity.     May  1915. 

.  Vol.  61.  America's  Interests  After  the  European  War.  Sep- 
tember 1915, 


lye  APPENDIX  II  [176 

American  Association  for  Labor  Legislation.  (American  section  In- 
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American  Federationist.  Passim.  (See  index  to  contents  for  the  years 
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March,  1914. 

Commons,  John  R.  Labor  and  Administration.  New  York,  Macmil- 
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.    Races  and  Immigrants  in  America.     New  York,  Macmillan, 

191 1. 

Commons,  John  R.,  and  Andrews,  John  B.  Principles  of  Labor  Legis- 
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.    Immigration  and  Labor.    New  York,  Putnam,  1912. 

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Irwin,  Will.     "The  Floating  Laborer."     Saturday  Evening  Post,  May 
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Jenks,  Jeremiah,  and  Lauck,  W,  Jett.    The  Immigration  Problem.    New 
York,  Funk  &  Wagnalls,  1913. 

Kellor,  Frances  A.    Out  of  Work.    New  York,  Putnam,  1905. 

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Kelly,  Edmond.    The  Elimination  of  the  Tramp.    New  York,  Putnam, 
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Leiserson,  W.  M.    **  The  Problem  of  Unemployment  Today."    Political 
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.    "  Public  Employment  Offices  in  Theory  and  Practice."    Amer- 
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.    "  The  Theory  of  Public  Employment  Offices  and  the  Principles 

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Unemployment  in  the  State  of  New  York.    New  York,  191 1. 


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Massachusetts.     Commission  on  Immigration.    Report.    Boston,  1914. 

.    Director  of  the  Bureau  of  Statistics.    46th  Annual  Report  on 

the  Statistics  of  Labor.     Boston,  191 5. 

Mitchell,  John.  Organized  Labor.  Philadelphia,  American  Book  and 
Bible  House,  1903. 

Mitchell,  W.  C.  Business  Cycles.  University  of  California  Press,  1913. 
(Memoirs,  University  of  California,  vol.  3.) 

Nearing,  Scott.    Social  Adjustment.    New  York,  Macmillan,  191 1. 

.    Social  Religion.    New  York,  Macmillan,  1913. 

.    "  Extent  of  Unemployment  in  the  United  States."    American 

Statistical  Association.  Quarterly  Publications.  September  1909. 
(New  Series,  no,  87.) 

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-^ .     Commission  of  Immigration.    Report.    Albany,  1909. 

.     Commission   Appointed  under   Chapter  518  of  the  Laws   of 

1909  to  Inquire  into  the  Question  of  Employers'  Liability  and 
Other  Matters.  Third  Report — Unemployment  and  Lack  of  Farm 
Labor.     Albany,  April  26,  191 1. 


178  APPENDIX  11  [178 

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.     "  The  Wheatland  Riot."     Survey,  March  21,   1914    (vol.   31, 

no.  25). 

Roberts,  Peter.     The  New  Immigration.     New  York,  Macmillan,  1912. 

Rubinow,  I.  M.    Social  Insurance.     New  York,  Holt,  1913. 

Seager,  Henry  R.  Social  Insurance — A  Program  of  Social  Reform. 
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Sheridan,  F.  J.  "  Italian,  Slavic,  and  Hungarian  Unskilled  Immigrant 
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Solenberger,  Alice.  One  Thousand  Homeless  Men.  New  York,  Char- 
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Spargo,  John.  "  Socialism  as  a  Cure  for  Unemployment."  American 
Academy  of  Political  and  Social  Science.  Annals,  May  1915  (vol. 
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United  States  Bureau  of  Labor  Statistics.  Monthly  Review.  July  191 5 
(vol.  I,  no.  4). 

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United  States  Commission  on  Industrial  Relations.  Final  Report. 
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United  States  Commission  on  Industrial  Relations.  Tentative  Propo- 
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United  States.    Immigration  Act  of  February  20,  1907. 

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Record,  December,  1914  (no.  18). 


VITA 

Frederick  Cecil  Mills  was  born  on  March  24,  1892, 
in  Santa  Rosa,  California.  He  was  educated  in  the  pubHc 
schools  of  Oakland,  California,  and  at  the  University  of 
California,  receiving  the  degree  of  Bachelor  of  Letters 
from  the  latter  institution  in  1914.  During  the  year  191 4- 
15  he  served  as  investigator  for  the  Commission  of  Immi- 
gration and  Housing  of  California  and  for  the  United 
States  Commission  on  Industrial  Relations.  His  investi- 
gational work  with  these  commissions  was  concerned  with 
the  related  problems  of  unemployment,  migratory  labor, 
and  immigration.  During  191 5-16  he  served  as  assistant 
in  economics  at  the  University  of  California,  and  carried 
on  graduate  study  under  Professors  Carl  C.  Plehn,  Jessica 

B.  Peixotto,  Stuart  Daggett,  and  Carleton  H.  Parker.  He 
acted  as  director  of  shelter  and  employment  for  the  city  of 
San  Jose,  California,  during  the  winter  of  that  year.  In 
June  1 91 6,  he  received  the  degree  of  Master  of  Arts  from 
the  University  of  California. 

The  academic  year  191 6- 17  was  spent  in  residence  at 
Columbia  University  as  Garth  Fellow  in  Political  Economy. 
His  work  in  economics  was  under  the  direction  of  Profes- 
sors Edwin  R.  A.   Seligman,  Henry  R.    Seager,  Wesley 

C.  Mitchell,  and  Robert  E.  Chaddock.     In  addition,  studies 

were  carried  on  in  philosophy  under  Professor  John  Dewey, 

and  in  anthropology  under  Professor  Franz  Boas.      He 

attended  the  graduate  seminar  of  Professors  Seligman  and 

Mitchell. 

179 


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